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Commons, John Rogers 


Trade unionism and labor 










Commons, John Rogers, 1862- ed. 

Trade unionism and labor problems ; 2d series, ed. with 
an introdnction, by John R. Commons ... Boston, New 
York [etc.] Ginn and company ['=1921] 

xiii, 838 p. 21i^'". (Half-title: Selections and documents in economics, 
ed. by W. Z. Ripley) 

Contents.— I. Security.— li. The labor market.— ni. L^bor manage- 
ment. — IV. Labor unions. — V. The law. 

l._Labor and laboring classes. 2. Labor and laboring classes— U. S. 
3. Trade-unions. i. Title. 

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Professor of Economics, Harvard Univbrsitv 


By Charies J. Bullock, Ph.D., Professor of 
Economics, Harvard University 

FINANCE {Second Edition) 
By Charles J. Bullock, Ph. D., Professor of 
Economics, Harvard University 

STATES. 176J-/S60 

By Guy Stevens Callender, late Professor of 
Political Economy, Yale University 


By Thomas N. Carver, Ph. D., Professor of 
Political Economy, Harvard University 

PROBLEMS {Second Series) 
By John R. Commons, Professor of Political 
Economy, University of Wbconsin 


By James Ford, Ph.D., Associate Professor 
of Social Ethics, Harvard University 

RAILfVAT PROBLEMS (Re-vised Edition) 

By William Z. Ripley, Ph.D., Professor of 
Political Economy, Harvard University 

{Revised Edition) 

By William Z. Ripley, Ph.D., Professor of 
Political Economy, Harvard University 


By Frank W. Taussig, Henry Lee Professor 
of Economics, Harvard University 


By Albert Benedict Wolfe, Professor of Eco- 
nomics, University of Texas 









« i ■ 

^^ AtCD 







*, •« * • 

f » 

• ■ • 
• • • • 



This book is a new edition, not a revised edition, of "Trade 
< Unionism and Labor Problems," published in 1905. As before, the 
(\ book is planned for use not only as a collection of reprints but also 
as a textbook. It provides raw material, theory, and discussion. It 
draws upon men of affairs and students. It is intended to give 
concrete cases and generalizations. The Introduction and Index are 
intended to bring together from all these cases the items on which 
generalizations may be made. 

I have again had the valued help of Professor Ripley, editor of the 
series. The liberality of the several authors, editors, and publishers 
in permitting this reproduction of their work is sincerely acknowl- 
edged, as well as the help of assistants in the Department of Eco- 
nomics of the University of Wisconsin — Mr. Olin Ingraham, Mr. O. 
F. Carpenter, and Miss Miriam Gaylord — who have made wide 
searches for me. 


University of Wisconsin 


CI 311 

TCbc iStftcmtum grcg< 





Introduction. By John R. Commons ix 



I. Industrial Relations. By John R. Commons i 

II. American Experience with Workmen's Compensation. By 

Willard C. Fisher 1 7 

III. Compulsory Health Insurance in Great Britain. By Olga S. 

Halsey 45 

IV. The British National System of Unemployment Insurance — 

Its Operation and Effects. By Olga S. Halsey 56 

V. Trade-Union Sickness Insurance. By James M. Lynch ... 71 
VI. Health Programs. By John R. Commons 81 


VI 1. Autobiographies of Floating Laborers. By P. W. Speek . . 94 

VI 11. The Men we Lodge. By Robert B. Brown 104 

IX. Interstate Migration of Negro Population. By W. O. Scroggs 1 1 5 

X. A Clearing House for Labor. By Don D. Lescohier .... 125 


XI. Scientific Shop Management. By F. W. Taylor and N. P. Alifas 141 
XII. The Problem of Labor Turnover. By Paul H. Douglas. . . 150 

XIII. Personal Relationship as a Basis of Scientific Management. By 

Richard A. Feiss 165 

XIV. Scientific Management and Dictatorship of the Proletariat. By 

Nikolai Lenin i79 

XV. Premium and Bonus Systems of Payment. By D. A. McCabe 199 

XVI. Protection of Piece Rate. By Charles W. Mixter 205- 

XVII. Nonfinancial Incentives. By Robert B. Wolf 218 

XVIII. Apprenticeship in the Metal Trades. By M. W. Alexander. . 233 

XIX. Profit-Sharing in the United States. By Boris Emmet ... 249 
XX. Profit-Sharing in the Baker Manufacturing Company. By John 

S. Baker 263 

XXI. A Plan for Collective Bargaining and Cooperative Welfare. 

Philadelphia Rapid Transit Company 270 





XXIL Workshop Committees. By C. G. Renold 288 

XXIII. Labor Administration in the Shipbuilding Industry during 

War Time. By Paul H. Douglas and F. E. Wolfe . 311 


XXIV. Trade-Unions versus Shop Committees. American Federa- 
tion of Labor 345 

XXV. Tendencies in Trade-Union Development. By G. M. Janes 349 
XXVI. Amalgamation of Related Trades in American Unions. By 

T. W. Glocker 3^^- 

XXVII. The Dominance of the National Union in American Labor 

Organization. By George E. Barnett 386 

XXVIII. The National Founders' Association. By Margaret L. Stecker 406 
XXIX. The Founders, the Molders, and the Molding Machine. By 

Margaret L. Stecker 433 

XXX. Collective Bargaining in the Glass-Bottle Industry. By 

Leo Wolman 45^ 

XXXI. The San Francisco Building Trades. By Ira B. Cross . . 477 
XXXII. Patternmakers' Local Agreements, Chicago. By F. S. Deibler 489 

XXXIII. The Settlement of Disputes under Agreements in the 

Anthracite Industry. By Edgar Sydenstricker .... 495 

XXXIV. Equalizing Competitive Conditions. By Ethelbert Stewart 525 - 
XXXV. The Hart Schaffner & Marx Labor Agreement .... 534 

XXXVI. American Federation of Labor Reconstruction Program . 562 


XXXVII. Liberty of Contract. By Roscoe Pound 579 

XXXVIII. Hours of Labor and Realism in Constitutional Law. By 

Felix Frankfurter 614 

XXXIX. Collective Bargaining before the Supreme Court. By 

Thomas R. I'owell 635 

XL. A New Province for Law and Order. By Henry B. Higgins 667 
XLI. Wage Theories in Industrial Arbitration. By Wilson 

Compton 694 

XLI I. Minimum Wages for Women. By F. W. Taussig . . . 7M 
XLIII. American Minimum- Wage Laws at Work. By Dorothy 

W. Douglas 738 

XLIV. Operation of the Industrial Disputes Investigation Act of 

Canada. By Benjamin M. Squires 779 

XLV. Eight-Hour Shifts by Law. By John R. Commons ... 807 

Index ^25 


Fifteen years ago Insurance and Unemployment were placed last, 
now they are placed first, in this book. Western civilization is built 
upon security of investments, and it is the insecurity of labor that 
menaces it (Chapter I). One great nation has attempted to abolish 
the system and to substitute government by organized labor. It was 
only in 191 1 that American states began seriously to safeguard the 
security of workers through accident compensation laws,' but the 
large amount of work yet remaining to be done in this very limited 
field is shown by Professor Fisher in his chapter on the subject 
(Chapter II). The extent to which England has gone in health 
insurance and unemployment insurance is shown by Miss Halsey 
(Chapters III and IV) ; while Mr. Lynch, former Chief of the Inter- 
national Typographical Union, shows how recent and imperfect as 
yet are the efforts of trade-unions in provisions against sickness 
(Chapter V). The relation of insurance to sickness prevention is 
shown in Chapter VI. 

The instability of employment has its personal and economic 
causes. How shall they be distinguished ? And, whether they are or 
are not distinguished, what is the social significance? Out of fifty 
or more interviews with wandering laborers had by Mr. Speek in 
19 14 I have selected two (Chapter VII). When you have read two 
or three the others furnish very little that is new. A corroborative 
view is given from a municipal lodging house (Chapter VIII) ; and 
the migration of the negroes to the North and West adds its evidence 
of insecurity (Chapter IX). How these workers come and go at 
the employment offices, and the need of a correct national system 
of offices, is shown by Mr. Lescohier from his experience in con- 
ducting a federal-state office (Chapter X). 

1 Commons and Andrews, Principles of Labor Legislation, p. 397. 
York, 1920. 







/ Management without democracy is the very despotism that pro- 
vokes revolution, and the problem of industry is truly the problem 
of management. Scientific management, applied to labor, passes 
through two stages : the older engineering stage, that dealt with indi- 
viduals, and the newer personnel stage, that deals with committees 
and unions. The main points of the older scientific management, 
as it affects labor, are presented in extracts from Mr. Taylor's ad- 
dress to the labor organizations of Milwaukee, and the attitude of 
trade-unions is shown in the reply of Mr. Alifas, representing the 
Metal Trades Union affiliated with the American Federation of Labor 
(Chapter XI). Mr. Taylor's great contributions to scientific man- 
agement were begun more than twenty years ago. Scarcely five years 
ago did employers begin generally to install labor departments or 
personnel departments in their factories. The deciding cause was 
the labor turnover (Chapter XII), with its newly discovered enor- 
mous expense to the employer. The discovery of the labor turnover 
begins the employer's scientific study of the laborer as a man, where 
the older "scientific management" had begun to study him only as 
a producer.^ A notable instance is given by Mr. Feiss showing the 
transition from the old scientific management to the new labor 
management (Chapter XIII). 

There is no automatic solution, no panacea for labor problems, and 
democracy without management reverts to despotism on the mere 
ground of its inefficiency. After the Soviets had taken possession of 
the Russian factories and the Bolshevik party had won over the 
Soviets, the confiscation of the factories without compensation, the 
expulsion of the managers, and the resulting breakdown of credit 
and discipline compelled Lenin to resort to despotism in the name 
of labor, to the prohibition of strikes enforced by dictatorship of the 
army, to proposals of "scientific management" which he had pre- 
viously condemned, and to offers of high salaries to managers if they 
would return. The fundamental wrong was confiscation, on a false 
theory that labor alone creates wealth, whereas credit and good faith 
are equally important in the process of production (Chapter XIV). 

In Chapter XV Mr. McCabe has analyzed with remarkable insight 
the principal methods of bonus and premium payment. The older 
scientific management, as applied to labor, achieved its success in 
1 Commons, Industrial Goodwill. New York, 1919. 



the scientific study of work and compensation for work, but placed 
too much reliance upon science as a means of restraining greed in the 
conflict of capital and labor. Mr. Mixter's knowledge and expe- 
rience of scientific management enables him to point out the crux 
of the matter and leads him to propose a rather drastic remedy 
(Chapter XVI). Mr. Wolf has made notable discoveries in scientific 
methods of securing the initiative of workers in production, which 
he describes (Chapter XVII), while Mr. Alexander describes the 
apprenticeship system of the General Electric Company, which had 
its inception at their West Lynn Works and which has become the 
model for many other companies (Chapter XVIII). Mr. Emmet 
made a prolonged investigation of profit-sharing systems, visiting all 
of the establishments whose systems he describes (Chapter XIX), 
and Mr. Baker tells of the plan in the factory of which he is the 
head, a plan which has carried profit-sharing over almost into pro- 
ducer's cooperation (Chapter XX). By means of his profit-sharing 
and cooperative-government system, Mr. Mitten converted the Phila- 
delphia Rapid Transit Company from imminent bankruptcy into a 
profitable business (Chapter XXI). Mr, Renold gives a systematic 
and comprehensive sketch of a shop-committee system, a system 
partly in operation in his works at Manchester, England, and partly 
expanded to meet new conditions (Chapter XXII). Mr. Douglas 
and Mr. Wolfe, of the Emergency Fleet Corporation, describe that 
gigantic governmental venture in labor management (Chapter 

The newer scientific management, which deals more or less collec- 
tively with labor, takes its new policy from trade-unionism. Chapter 
XXIV shows the attitude of the American Federation of Labor 
towards these very systems of shop committees or "employer's 
unions," which are presented in the preceding chapters. That trade- 
unionism is not a fixed or simple affair, but is as changeable and 
diversified as the industrial and governmental conditions which it en- 
deavors to control or regulate, is shown by Mr. Janes (Chapter 
XXV). Mr. Glocker shows the tendency toward closer cooperation 
of unions in related trades (Chapter XXVI), and Mr. Bamett 
the development of a distinctive feature of American unions — the 
supremacy of national over local unions in a single trade (Chap- 
ter XXVII). Miss Stecker (Chapters XXVIII and XXIX) and 





Mr. Wolman (Chapter XXX) show the contrasted outcome of the 
introduction of machinery in the relations of organized employers and 
trade-unions on a national scale, while Mr. Cross (Chapter XXXI) 
and Mr. Deibler (Chapter XXXII) show respectively the dominance 
of unions (San Francisco building trades) and the equilibrium of 
employers and employees (Chicago patternmakers) in collective bar- 
gaining. Mr. Sydenstricker shows the development of the famous 
Anthracite Coal Strike Arbitration of 1903, which established an 
open-shop agreement without recognition of the union (Chapter 
X.XXIII), and Mr. Stewart shows certain effects in the bituminous 
coal-mining industry of the characteristic effort of trade-unions to 
equalize competitive conditions (Chapter XXXIV). Chapter XXXV 
gives verbatim the shop agreement of Hart Schaffner & Marx, which 
has recently (1919) been extended to cover the entire competitive 
men's clothing industry throughout the principal manufacturing 
centers of the United States. 

The essentially conservative program of the American Federation 
of Labor is brought out in Chapter XXXVI and should be com- 
pared with the program of the British Labor Party readily available 
in the Monthly Review, United States Bureau of Labor Statistics, 
April, 1918. 

The transition in the juristic theories of American courts from the 
individualistic notions of the eighteenth and nineteenth centuries 
to the collectivistic notions of the twentieth century appears vividly 
in the articles by Roscoe Pound (Chapter XXXVII) and Felix 
Frankfurter (Chapter XXXVIII) of the Harvard Law School, 
while the hesitancy of the Supreme Court in extending the innova- 
tions to labor organizations is shown by Mr. Powell, of Columbia 
University (Chapter XXXIX). The complete adoption of collec- 
tivistic theories of jurisprudence is seen in detail as Chief Justice 
Higgins, of the High Court of Australia, reviews the decisions handed 
down by the Australian Court of Conciliation and Arbitration 
(Chapter XL), while Mr. Compton analyzes the economic theories 
underlying this new province of law (Chapter XLI), and Mr. Taussig 
shows the economic limits within which it may be expected to be 
confined (Chapter XLII). 

The most complete study yet made of minimum-wage laws in 
American states is given by Miss Douglas (Chapter XLIII). A 


careful study, on the ground, of the operations of the Canadian 
effort to limit the right to strike during investigation is given by 
Mr. Squires (Chapter XLIV), while the editor of this book presents 
considerations leading to a plan for elimination by federal law of 
perhaps the most serious blot on American industry, the twelve-hour, 
seven-day system of the steel industry, which, in 1919, withstood 
the attack of organized labor (Chapter XLV). 

These chapters are selected with a view to setting forth five prin- 
cipal aspects of labor problems. The first in importance is Security 
(Part I), beside which all other problems are relatively simple. Next 
is the Labor Market (Part II), wherein the problem is closely related 
to security. Next is Labor Management (Part III), the part played 
by employers; then the part played by Labor Unions (Part IV); 
and finally the part played by the state through legislation, 
administration, and judicial decision (Part V). 




THERE is no automatic method of bringing about industrial 
peace; no panacea can be proposed. The socialists propose a 
panacea They consider that the conflict of capital and labor spnngs 
from the historical fact of private property, and that if pnvate prop- 
erty is abolished and all property made common, then there will be 
harmony. There will be no clashes and no conflict. ^^^Jf""^ 
abolish conflict and bring about industrial peace by abohshmg pri- 
vate property, but in order to accomplish that result they must also 
abolish liberty. As long as there is liberty there will be strikes for 
a strike is nothing more nor less than liberty to stop work and to 
wait for a bargain-it is a process of negotiation, it is a scheme o 
withholding your property until you can agree on the terms of 


The principal new thing about this situation in modern industry 
is that it is conducted on a large scale,-much more than we have 
ever known before -and that is because there is more liberty than 
has ever been known before. It has only been two generations that 
the workman, under our constitution, has been free. We have a new 
situation. The libertv of labor is a new phenomenon, and it should 
not be surprising that we have not learned to deal either with the 
institution of property or with the liberty of the workingman. They 
are both new problems. 

iFrom an address, "Bringing about Industrial Peace," before the Conference 
of the National Association of Employment Managers, December 13, iQiQ- 



It would be futile to propose any single solution of the so-called labor 
problem. Two things, however, may be mentioned which seem to be 
impossible in the direction of a solution of the task of bringing about 
industrial peace. It cannot be brought about by rough methods. 
We have gone through considerable discussion of compulsory arbitra- 
tion, and there has been a considerable reliance on the injunction and 
on threats. These crude methods are breaking down. We may put 
the leaders in jail, we may prevent them from using the mails, and 
we may tie up their funds ; but if beneath what the leaders are doing 
there is a real grievance, a real unrest and a mass movement, we 
cannot permanently suppress it. The rough method has about 
reached its limit. It has failed in the different countries where it has 
been tried, and recent events in this country seem to prove that we 
cannot resort to the rough method of bringing about industrial peace. 

Then there is another means which has been resorted to more or 
less, the method of misrepresentation. Perhaps the greatest offender 
in the method of misrepresentation is the United States Steel Cor- 
poration. It flooded this country with propaganda of Bolshevism, as 
though the laboring people of the United States, who are demanding 
the abolition of the twelve-hour day and the seven-day week, were 
animated by the desire of taking possession not only of the factories 
of the Steel Corporation but of all factories. Apparently they suc- 
ceeded in that propaganda and misrepresentation. You find through- 
out the country not only an unrest amongst laborers but a decided 
unrest amongst employers. Employers have become easy marks — 
anybody who has a panacea can come to an employer and lift $ioo 
out of his pocketbook by offering him a remedy against Bolshevism. 
The unrest which has been stirred up amongst employers by the 
Steel Corporation in its wonderful propaganda is a menace to the 
industrial peace of the country. Neither rough methods nor mis- 
representation will permanently bring about industrial peace. 

If we cannot rely upon these methods of the past, what is going to 
be the method and what can we offer as a remedy in bringing about 
industrial peace ? In my judgment the method is one not of a year 
or two years but of many years. It is the method of prevention. 
We must investigate the conditions which cause this industrial 
unrest and we must prepare in advance to remove the conditions 
which cause conflict to waken up. 


Last February the administration at Washington might have 
known what was going to happen in the coal-mining industry. The 
administration had all of the means of knowing how many hours' 
work the men were getting in the week ; they had the means of 
knowing that after the armistice was signed employment fell off; 
that during the winter months and on through the summer the men 
were not working two thirds of the time, or even half time ; that in the 
winter they were compelled to sell their Liberty Bonds, they were 
compelled to eat up their savings, and there was great suffering in 
many parts of the mining districts. Anyone who attended that con- 
vention of the mine-workers' union in Cleveland last summer and 
saw those twelve hundred mine-workers coming up out of the ground 
in one great solid, unanimous opinion could not for a minute conceive 
that their unrest was the work only of agitators and leaders. They 
were not officials, they were not the salaried leaders defending their 
jobs. They were the actual mine-workers sent there by the local 
unions to protest against conditions. 

They made a great statistical blunder and perpetrated an eco- 
nomic fallacy. Their statistical blunder, owing to the lack of proper 
statistical information, led them to ask for an increase of 60 per 
cent in their wages. They figured it out accurately, according to 
the light which they had. Their statistician had figured that their 
cost o'f living had gone up about 104 per cent, whereas, as a matter 
of fact, it had gone up only 80 per cent— they had taken wholesale 
prices rather than retail prices. They figured their wages had gone 
up 44 per cent and they wanted another 60 per cent, and, added 
to the 44 per cent on the 19 14 basis, that would have brought them 
up exactly even with the cost of living. 

Their economic fallacy was based on the idea that by restricting 
the hours of labor to six they could force industry to equalize em- 
ployment throughout the year. The impression was generally spread 
over the country that what they intended to do was to restrict the 
output by cutting the hours from eight to six. We all know now 
that what they were really trying to do was to distribute the work 
evenly throughout the year. A man working in a coal mine often 
does not know until the w^histle blows in the evening whether there 
will be work tomorrow or not. When he goes to work in the morning 
he does not know whether he will have two, three, four, five, or 


eight hours of work. Living in this state of uncertainty, not simply 
for the year but for twenty or thirty years, the mine-worker has 
been brought up on the conviction that each time he reduces the 
hours of labor he forces the employer to distribute the work more 
evenly He is not asking for less work, he is asking for steady work. 
The administration at Washington should have known these con- 
ditions and circumstances. They had the correct statistical informa- 
tion they knew the conditions in the industry, and at the time when 
the 'administration lifted the ban on the operators' price of coal they 
should have negotiated with the operators to bring about an adjust- 
ment of wages so as to meet accurately the cost of living. 

This fluctuation of prices, this changing cost of living, has been 
goin- on for an entire century. It is not a new phenomenon. One 
hundred years ago, at the close of the Napoleonic Wars, we had the 
same situation. We had it again in the thirties owing to wildcat 
banking at that time. We had it during the Civil War, and now we 
have it repeated. We have had in all of these periods quite the same 
crude explanation of the facts-the rise of prices has always been 
charged up to monopolies and profiteering. It has now been charged 
up to restrictions by the laborers. It may be true, and no doubt it 
is that there is profiteering and that there is "laying down" on the 
job by wage-earners, but if we try to figure out how much influence 
either profiteering or restrictions by labor has on the elevation of 
prices I think we will have to conclude that if we could stop all of 
the profiteering and stop all of the restrictions by labor, it would not 
affect the total result very materially. Profiteering and restrictions 
are mainly results, not causes, of rising prices. The high cost of living 
is something that neither the employer nor the employee can prevent. 
It does not come from anything under the power of capital and labor 
to overcome, and yet it is the one great cause of uncertainty and 
unrest, and has been for a whole century. 

The fluctuation of currency is the greatest of all the labor problems. 
It throws a red brick continually into capital and labor. The first 
great method of importance in bringing about industrial peace is the 
stabilizing of the dollar. If we could have a system of currency in 
which the great price movements which have been occurring in all 
these years could be stabilized, we would do more to stabilize in- 
dustry, to bring about industrial peace, than any other one thing. 


In times of rising prices we have restrictions, aggressive movements ; 
in times of falling prices we have unemployment, bankruptcy, and 
depression. The whole situation is rendered unstable, and we are 
living continuously in a period of uncertainty. 

I know of no way of reaching that question, which to me seems 
the most fundamental of all, except that remedy proposed by Irving 
Fisher, of stabilizing the dollar.^ Yet we know that a remedy of this 
kind will not come very soon. Consequently the best that can be 
done is for employers and employees to adjust themselves to the 
situation. Capital and labor alone cannot prevent this fluctuation. 
There is, apparently, only one great constructive plan in this 
country on a national scale which has attempted to bring about 
industrial peace by meeting the situation of the currency, and that 
is the plan which is now being worked out in the book and job print- 
ing business with the labor organizations. With the increased cost of 
living, the printing business did not raise wages. They had their 
agreements that had not expired and did not provide for raising 
wages. But in two or three places in the country— in New York, 
Chicago, and Seattle— the local unions violated their agreements and 
went after the increased wages by direct action. And, although the 
employing printers contended that they could not pay the increase, 
yet when they came to it they not only paid the increase but they 
paid more than the increased cost of living. The^qnly places in the 
United States where labor actually secured, in the book and job 
printing business, an increase in wages corresponding to the increase 
in the cost of living were where the local unions defied their own 
national unions. What a lesson that was to labor in the United 
States! The only way we can keep up with the cost of living is by 
violating our agreements, by resorting to methods which we have 
promised not to adopt, by defying our own organizations. 

Consequently we find that the book and job printing business has 
come together on a national scale and is in the process of adopting 
the principle that employers will not wait until demands and strikes 
are upon them, but will automatically change the level of wages as 
the changing price curve moves up or down. Every six months, or 
atperiodic intervals, a change is proposed to be made throughout the 
entire United States, on the initiative of the employer— not waiting 
1 Fisher, Stabilizing the Dollar. New York, 1919. 


for labor to make the demand,- thus heading off this unrest in 
the localities. In doing that the employing printers throughout the 
United Stdtes for the first time have joined with the national or- 
ganizations of labor where their interests are alike, and we see on a 
new national scale the largest expansion of scientific management - 
capital and labor combining to look ahead to the future m order to 
prevent industrial conflict by remedying the conditions m advance. 
Of course we have the objection that if an increase in wages causes 
prices to go up, and if an increase in prices provokes a further de- 
mand on the part of labor for wages to go up, we have that vicious 
circle But that vicious circle cannot be avoided as long as we have 
inflation of currency. If we had a stabilized dollar, no matter what 
the relations are, the prices and wages would be stabilized in ac- 
cordance with the general level of the price curve. It is a mistaken 
view that it is this pyramiding of wages and prices that keeps prices 
up. It is not the pyramiding of wages and prices, it is the inflation 
of the world's currency ; and no matter what adjustment might be 
made between employers and laborers, a correction of the currency 
of the world could stabilize prices and prevent the need of this 
pyramiding. That is the first and most important fundamental 
condition to be recognized in the conflict of capital and labor, as it 

appears to me. 

What about restrictions of output? Everybody knows that m 
good times working people "lay down" on the job, no matter 
whether organized workers or not. People do not work as hard in 
good times as they do in hard times. We have the curious paradox 
that in good times, when we ought to increase the output, labor 
restricts the output ; and in hard times, when we don't want people 
to work so hard and increase the supply of production, then they 
work the hardest. A business man does not conduct his business 
in that way. In good times, when prices are going up, he tries to 
increase his output ; in hard times, when prices are falling, he tries 
to restrict his output-— he does not buy more than he can sell. In 
other words, labor works just the opposite of business. In good 
times, when prices are up, then is when labor "lays down" on the 
job and refuses to increase the output and keep up the supply. In 
hard times, when the demand has fallen off, then is when labor works 
the hardest and turns out the most production. It surely seems that 


we have been going on a wrong hypothesis in dealing with labor. 
It works out all right in dealing with marketing and commodities, 
but labor seems to work just the opposite. 

We have been going on the theory that in order to get efficiency, 
in order to get output, in order to get laborers to work, there must 
be some kind of a penalty held over the workingman— the penalty of 
unemployment, the penalty of being discharged if he does not work, 
if he does not do his duty, if he is not on the job. It is then 
that he suffers the penalty of being discharged from his job. Our 
method has been the rough method of disciplining labor by the 
penalty of unemployment. 

That penalty does not work in good times ; it works too much in 
hard times. In good times the workman is not afraid of unemploy- 
ment. What's the use? If he is discharged, he can go across the 
street and get another job. In hard times, when we don't want so 
much produced, then he works hard because he is afraid of unem- 
ployment and cannot go across the street and get another job. 
The psychology of labor, both in good and in hard times, is funda- 
mentally the psychology of a class of people whose life is insecure, 
who are subject to rough methods of discipline. We cannot under- 
stand the problem of dealing with labor unless we understand that 
fundamental fact of insecurity of employment. It is just as vicious 
in good times as it is in hard times. In good times the workingman's 
high wages are an injury to him ; he gets too much money, and he 
does not know what to do with it and spends it extravagantly,— 
burns it up, — and when the hard times come he has nothing to fall 
back upon. The fluctuation of earnings— great earnings in good 
times, falling off in hard times — is demoralizing to the character of 
working people. 

If we have to depend upon the rough method of discharge for get- 
ting efficiency, then we are going to keep labor continually unstable 
and uncertain, and the character of the workingman will not rise to 
the occasion of modern industry. 

Modern capitalism is not based upon the ownership of physical 
things. We might see much of our machinery and our buildings de- 
stroyed by earthquake or war, but we all know that if we retain the 
credit system it will not be very long until all of our machinery and 
buildings are restored. We usually consider that the production 



of wealth is brought about by the union of capital, management, 
and labor. Capital is the physical machinery and the tools ; man- 
agement is the organizing element; labor produces the physical 
product. The three must, indeed, be combined, but the greatest 
instrument of production— the thing that really produces modern 
wealth— is not physical things, is not labor, is not management; 
it is confidence in the future, it is a credit system based on 
the expectation of industrial continuity— an expectation that debts 
will be paid. The capitalistic system is security of expectations. 
If we could not offer security to the investor, we might still have 
production of wealth. Physical things, management, and labor might 
go on producing wealth, but you know how much wealth could be pro- 
duced if it were not for our credit system. The production of wealth 
would fall back to what it was in colonial times ; nobody could ship 
his product to anybody else, and we would not trust one another. 
Capital is based upon security of expectations. The investor has con- 
fidence that his investment will be returned to him, that promises will 
be kept. That is the great producing factor in modern industry. 

Now capitalism is to blame because it has not offered, as yet, to 
labor that security of the job which it has offered to the investors in 
the security of their investments. Capitalism is threatened because 
it has not furnished the working people a similar security to that 
which it has furnished to the investors. The workingmen are getting 
the idea throughout the world that the elements that produce wealth 
are the workingmen and the management ; and we have the Plumb 
plan, in which two million workers in the United States come 
forth to oust the credit system and let simply management and labor 
produce the wealth of the country. They would destroy the thing 
upon which the credit of the railroads is built, because they think 
that the producing elements are management and labor. 

Well, that is much the same idea that they have in Russia, and 
that is the fundamental notion of modern laboring people spreading 
throughout the world. They do not appreciate that modern capital- 
ism is based on faith in the future ; they have not themselves been 
given that same security. Capitalism to them is autocracy and in- 
security. They have tried to get security by rough methods. Trade- 
unionism, closed shop, union shop, and so on are their methods of 
obtaining security of the job. Not until the capitalistic system, not 


until the great financial interests that control this country, have 
learned that it is just as important to furnish security for the job as 
it is to furnish security for the investment will we have a permanent 
provision for industrial peace. 

We have only begun in recent years to try to establish security 
of the job. The first effort made was eight or ten years ago in the 
workmen's compensation law— the accident-compensation law. That 
was the first comprehensive effort to establish security for the job. 
Unemployment no longer damages, as it did, the man who is hurt 
during employment. The next step is probably the similar treatment 
of sickness insurance. 

In the case of accident compensation this curious thing developed : 
employers vigorously fought the legislation at first because it was 
going to increase the cost of production and the expenses of business ; 
but after the law was enacted and the employers were compelled by 
law to pay compensation, they introduced a new element in industry 
—they introduced a safety expert. They developed a new depart- 
ment of industry. I knew of an establishment that figured that if 
the compensation law was enacted, their premium on insurance would 
increase from $5000 to $22,000 a year. That was what they were 
told by the insurance people and by their claim agent, and they were 
dreadfully scared. After the law was enacted, however, they changed 
their claim agent into a safety expert, and the very first year, instead 
of paying $22,000 for compensation, or even $5000, it cost them 
only about $2500. 

The accident-compensation law has accomplished the first little 
step toward giving security to the job. It has shown that the only 
way to establish security is by making it financially profitable. And 
so we shall make it financially profitable to business to eliminate 
unemployment on account of sickness, on account of changes in 
seasons, on account of fluctuations in business. Labor can never ac- 
complish this result. The only possible accomplishment of it will 
come when the employer puts in his personnel department, his 
personal-relations department, his safety men, his welfare men, and 
his men who stabilize employment. We know that employers who 
have done this have made their jobs regular — they have regularized 
their work, and there is good reason to believe that all can do it if 
the inducements are adequate. 


There are many ingenious methods that can be adopted. Yet it 
appears to me that we cannot get the large capitalistic interests 
awake to this subject of stabilizing employment unless the gov- 
ernment takes hold of it. If we had a tax on unemployment of 
$1 a day for every man who is laid off, we should soon find that 
capitalism would put its personnel experts at work to regularize the 
business, and they would have no tax to pay, because they would 
have stabilized the work. 

The fundamental lines along which industrial peace is to be brought 
about are those which go to the psychology of the workingman and 
substitute in his mind something like that which we have in the mind 
of the investor. The employer who is willing to pay compensation 
for unemployment, who is willing to furnish what the workingman 
needs, knows that the workingman needs to have something to wait 
for and needs to have confidence in the future. 

I visited a number of establishments this summer, making a 
special study of the circumstances under which efficiency had been 
increasing or decreasing, and found that notwithstanding some were 
complaining about labor's laying down on the job, yet in particular 
establishments the output had increased. What is the secret of it? 
It seems to me that in all these cases this was found to be true: 
a new principle had come into the business, — management had ob- 
tained a new view of labor, — and I may contrast it by the history 
of scientific management. 

Mr. Taylor, as you know, started his wonderful development 
in scientific management by offering to the industrial workers a 
chance to better their condition. He appealed to the individual 
worker. But the modern scientific management of personnel appeals 
to the collective interest of all the workers in the business. It is be- 
ginning to recognize that the workingman does not want to have high 
wages for himself if by doing so he seems to deprive his fellow 
workers of high wages. It is as though we are upon a ship on the 
ocean — there is only a limited amount of products to go around; 
the man who saves his own life and lets the others go down cannot 
live with his fellows afterward. So it is with the modern working- 
man ; he is continually haunted by the feeling that there is only a 
limited product to be distributed, and consequently even the better 
men, when appealed to individually to increase their wages, cannot 



stand it to go ahead too far amongst their fellow workers. If they 
get out of the class of ordinary workmen and become foremen and 
superintendents, that is one thing ; but to stay in the ranks of labor 
and to earn much more than the others seems to be taking bread out 
of the mouths of their fellow laborers. 

Modern management is learning to deal collectively with the work- 
men in the shop ; whatever one worker does to benefit that shop will 
benefit all of us — we are all going to be lifted up together. We are 
not going to set workingmen competing with each other and try to 
get one ahead of the others and appeal only to his self-interest. That 
was all right in times past, when the world seemed to be full of un- 
occupied resources, when anybody could go out and get all he wanted 
and yet not take it from anybody else. Now, as we are getting closer 
together, as business is getting on a large scale, the man who gets 
more for himself seems to be taking it from the others, and so we 
have that solidarity of labor which is a psychology that must be 
recognized by all management. 

This psychology should be combined with the idea that the busi- 
ness itself is the place where we shall have our living — our confidence 
in the future. I visited INIr. Ford's factory recently. Mr. Ford does 
not have an idea there of cultivating the efficiency of his laborers. 
His great profit-sharing system, as you know, is a distribution not to 
men who are efficient, in order to increase the output, but to men 
who lead a "clean and wholesome" life — they get the profit. The 
men who do not lead a clean and wholesome life do not get profits. 
John D. Rockefeller, the senior, says that Ford's plan is the indus- 
trial miracle of the age. Well, the Ford plant is the psychological 
miracle of the age. It has not gone after efficiency first ; it has gone 
after the clean and wholesome life. Efficiency is a by-product of the 
clean and wholesome life. 

When I visited the White IMotor Company I was impressed with 
the fact that it is not in detailed methods of piece and bonus pay- 
ments that they try to reach the individual and increase his pro- 
duction, but it is in creating the conviction in every man in that 
industry that that is his industry, that the future of that concern 
is his future. Thinking and planning for the future is the White 
Motor's big efficient machinery of production, just as security for 
investment is. Get capital to think of the security of the job and it 

If I 



begets efficiency of labor. We must look upon efficiency as a by- 
product and not as the main thing in industry. 

It seems to me, to transfer this to the national scale, here is where 
capitalists have fallen down. Mr. Gary has fallen down representing 
the capitalistic system; labor organizations have fallen down; 
Mr. Gompers, representing trade unionism, has fallen down; the 
politicians have fallen down in bringing about industrial peace.^ 
Where shall we look for any people in the United States who have 
the preventive idea ? who can look forward and plan for the future ? 
who will base the bringing about of industrial peace on knowledge of 
labor and on knowledge of security ? We must look for it in placing 
the personal-relations department ahead of the engineering, com- 
mercial, and production departments of industry. It is only in the 
personnel department that we find the beginnings of true scientific 
management — the department of scientific human relations, which 
appreciates and knows what are the fundamental things for labor's 
efficiency. If we can have our modern industry conducted as a 
personal-relations industry, above the commercial department, 
above the engineering department, above the manufacturing depart- 
ment, above the production department, and if we could bring to- 
gether on a national scale, instead of our great financiers, instead of 
our great labor unions, instead of our politicians, — if we could bring 
together those who are developing the modern personal-relations 
method, then I think we might work out some plan for bringing about 

industrial peace. 

Yet it is because, and to the extent that, personal-relations depart- 
ments are coming to recognize some form of collective bargaining or 
collective government that they are fit to come forward as national 
leaders at this time. Socialism has no need of personal relations in 
management, because, according to Marx's theory, "social labor 
power" moves on to its historic goal regardless of the individual 
will. Capitalism had no need of personal relations, because capitalism 
was but adjustment to the laws of demand and supply, over which 
individuals and classes have no control. But with our great cor- 
porations and associations on the one hand and organized labor on 
the other it is only by a science of collective management that capital 

1 Referring to the first Industrial Conference called together by President 
Wilson, which split on the question of collective bargainmg. 

I I 



and labor can work in harmony and security. It becomes then a 
science of political economy as well as a science of business. 

The science of political economy began with individual bargaining. 
Adam Smith, its founder, in 1776, laid its foundation, and in an 
interesting and important chapter pointed out the great evil of 
collective action. One of the most serious things, he thought, that 
industry had to contend with was association of capitalists. The 
great evil of an association of capitalists was that when they combine 
they deprive the minority of their liberty. The majority vote of the 
association binds the minority. Consequently the combination — 
the association of capital in corporations — was condemned by him 
as intruding upon the liberty of the individual. He even went so 
far as to condemn social gatherings of merchants, for he said : " When 
your merchants come together, what does their conversation turn 
to? It does not turn to increasing efficiency. K turns to hatching 
up some conspiracy against the public." 

Adam Smith started political economy upon the individualistic 
basis. He spoke at a time when industry was throttled by guilds 
and governments. The French Revolution overthrew that system. 
The French Revolution was an attack by the small manufacturers 
and merchants, the small capitalists and workers, against the govern- 
ment and the governmental regulations of the time. One of the 
great statutes of the French Revolution was that statute which pro- 
vided that no association, either of merchants, manufacturers, or 
laborers, should be permitted. That statute stood on the statute 
books of France until the year 1884, when it was finally repealed. 
Meanwhile, there had grown up, unknown to Adam Smith, unknown 
to the French Revolution, our modern system of corporations. When 
it came to the middle of the nineteenth century, about the year 1850, 
for the first time, with our general incorporation laws, it was made 
possible for any association of capitalists to come together and form a 
legal association to conduct their business. Prior to that time the only 
way in which you could form a corporation was by going to the 
legislature and asking for a special charter. With the general incorpo- 
ration laws, beginning about 1850 in this country, it became possible 
for any group of capitalists to get together, simply file their articles 
with the secretary of state, and become an association. That violated 
all the principles of political economy and the French Revolution. 

I I |: 


The modern business world is conducted upon the principle of as- 
sociation, of requiring the minority in a group to submit to the will 
of the majority, and if one person happens to be the principal stock- 
holder, then all the minority obey the will of that one person. We 
are not living in the time of the French Revolution ; we are living 
in the time of the Russian Revolution. 

It differs entirely from the Fiench Revolution in that it is based 
upon the principle of government by organized labor — a scheme 
first propounded seventy years ago by Karl ]\Iarx, that this capital- 
istic system must be overthrown and that now was the time for 
workingmen of the world to unite. Russia has given us the fruition 
of that theory, based upon the organization of labor. 

Our Western civilization today is confronted by an entirely dif- 
ferent situation. At the time of the French Revolution we had a 
new world opening up to which the oppressed peoples might escape. 
This has been going on until at the present time this new world is 
pretty well occupied. Great corporations have sprung into being. The 
natural resources are controlled, and if the workingman is to have 
any opportunity, he cannot secure it by going west, by escaping from 
Europe and settling on the soil of America. When he escapes from 
Europe he comes to America and works for a corporation. Capital 
has associated — the law has made universal the right of association 
on the part of capital. Thus the workingman coming into this new 
world, with th^ resources occupied, without any homestead law or 
opportunities tcr become independent, can secure his advance only 
as he works with the thousands for the corporation. 

Furthermore, the small employers who are not formed in corpora- 
tions are more and more uniting in associations. We have all kinds 
of associations — associations of farmers, associations of merchants, 
associations of independent manufacturers: they are formed for 
all classes and purposes and they are recognized in law. They are 
created into employers' associations, operating with a formal policy 
regarding labor, so that the modern workingman is confronted with 
a situation where associated effort is the rule of the day, where 
employers have compelled employees to submit their individuality 
to the control of the majority in these associations and corporations. 

The workingman of modern life, then, is imbued largely with 
these ideas, which have reached their disastrous victory in Russia. 



He is welcoming the idea, at least toying with the idea, that by group- 
ing together in associations he may gain from his employers that 
which he cannot get by escaping to the natural resources of the coun- 
try. And whether we will it or not, whether we wish for it or not, 
the workingmen of modern life, in so far as they are capable of 
organizing, are doing so. 

It is not a theory of collective negotiation or collective govern- 
ment that we are confronted with ; it is conditions and facts. Work- 
ingmen are combining and cooperating more and more ; and the 
more they get intelligence, the more they get Americanized, the more 
will they combine. In this combination of workingmen they attempt 
to accomplish through collective power what they cannot accomplish as 
individuals. The feeling of solidarity is arising amongst them — the 
feeling that for the large majority there is no opportunity for them- 
selves as individuals except as they move upward in a mass, that if one 
individual outdistances the others he is injuring the others, but that 
if he uses his influence in bettering his own condition so that, at the 
same time, it will lift up the others, then that is a desirable thing. 
This feeling of solidarity, this feeling of unity, is forcing him, as it 
were, throughout the Western world to assert what collective power 
he can. The employer who starts out with an idea of individual 
bargaining is confronted by the fact that he perhaps will not have 
a chance to enforce his ideas. 

There are two classes of employers, apparently. There is that 
class of employers, corporations, or individuals who conduct their 
business in such a superior fashion, who have such personal relations 
developed with their employees, that labor has no desire to force a 
collective arrangement upon them. There is another class of em- 
ployers who, either through their own attitude or through the stress 
of competition, are not free to deal with labor on these higher 
personal relations. Labor organization has not come into existence 
at all to deal with that first class of employers. It has not been 
provoked in order to overcome any resistance on their part. It has 
come in solely in order to use coercion with reference to the other 
class of employers. The collective dealing which we are discussing 
is not to be considered universal ; it is not to be considered as apply- 
ing to all employers or all capitalists. It applies only to those who 
need it because they will not or cannot meet new conditions. 


I * 



Labor organization, however, has this defect : when once it has 
started, when once it has begun to apply, it stretches out to reach 
all employers in a competitive area. By force of circumstances it 
brings the others into the fold. A small number of employers or 
corporations may be above the level, but a large proportion are in 
that field where there is a contest and a conflict going on. 

If we let our vision pass from the time of Adam Smith and the 
French Revolution, when individual bargaining was the ideal of 
political economy, down to the time of the Russian Revolution, when 
these very corporations themselves, although they have become enor- 
mous, are treated as though they were individuals, — if we allow our 
view to pass over this century, we shall widen our comprehension and 
not only have a place for the individualism which produced the 
French Revolution but have a more intelligent method of meeting the 
collective idea which has shown itself in the Russian Revolution. 

John R. Commons 

University of Wisconsin 




EXPERIENCE under the American compensation statutes has 
justified in fair measure the hopes and claims of those who have 
advocated the legislation. It has not been millennial. But it has real- 
ized no small part of the advantages which were predicted. So much 
may be stated with entire confidence and after due allowance for the 
present incompleteness of definitely relevant data." In fact, a reason- 
ably confident conclusion of that character might be reached without 
examining any of the detailed reports upon the practical working 
of the statutes and with only a knowledge of the rate at which the 
compensation system has been extended from state to state. Ten 
years ago the early and ready acceptance of workmen's compensation 
in other lands was urged as a strong argument for the enactment of 
compensation legislation in this country. It was pointed out that 
within a quarter century the newer principles and policy for the relief 
of employees injured in industry had been adopted in some forty 
foreign jurisdictions, including all of the industrially important ones, 
and that, once adopted, nowhere had there ever been any serious 
proposal to give them up. 

But foreign readiness to enact compensation laws has been more 
than matched in the United States. It is not yet nine years since 
the first of the really effective American workmen's compensation 
statutes were enacted."' Yet such laws now have been enacted in 
forty-two of the forty-eight states and in Alaska, Porto Rico, and 
Hawaii. Only the District of Columbia, North Carolina, South 

iFrom American Economic Review, Vol. X (1920), pp. 18-47. 

2 Conditions growing out of the war have delayed and even suspended the 
publication of data in several of the states, including some of the largest of 
them, whose experience would be most instructive. Here may be mentioned 
New York, Pennsylvania, Ohio, and Illinois, as well as a number of others. 

3 In Kansas and Washington on the same day, March 14, 1911. 


1 fij 



Carolina, Georgia, Florida, Mississippi, and Arkansas are still without 
compensation statutes. And a late appropriation for the District of 
Columbia brings all public employees in that jurisdiction under the 
provisions of the federal workmen's compensation law. It is not 
credible that the states would have taken action so speedily, one 
after another and in full knowledge of what had been done elsewhere, 
often in adjacent states, except upon conviction that the action taken 
was of proved wisdom. Doubtless none of the tardier legislatures 
knew every effect of the earlier enactments. Nobody knows as much 
as that even now. But they did know, through universal report and 
belief, that of evil effects there had been as good as none and that 
general results had been eminently satisfactory. And upon such 
knowledge they acted. 

There is other general evidence of the same presumptive character. 
As in foreign lands, so in America there has been never a voice raised 
for the repeal of the statutes. Rather the tendency of legislation 
everywhere has been to go farther, to strengthen and improve the 
first laws. The field of the acts has been broadened somewhat by 
the inclusion of additional workmen. Rates of compensation have 
been increased in various ways — by higher percentile ratings upon 
wages, by raising the fixed maxima, by shortening the waiting periods, 
by extending the duration of the payments, by more liberal provisions 
for medical care, and in still other minor ways. The original limita- 
tion to accidental injuries has been done away in a few states.^ The 
certainty of payments to injured employees has been made greater 
by stricter requirements of insurance and by corrections of adminis- 
trative procedure. And the simpler and more summary administra- 
tion by boards or commissions, rather than through the courts of 
law, has been increasingly favored. 

By many tokens employers have shown their approval of the 
system. There are, to be sure, some regrettable failures of the 
optional statutes to win acceptance by employers.^ But these are 
not very numerous, relatively. Much the larger numbers of the 
employers affected have accepted their new obligations cheerfully. 
In the states in which the employer's acceptance of the optional 

^Diseases now are included in California, Connecticut, Massachusetts, North 
Dakota, and Wisconsin. 

2See U.S. Bureau of Labor Statistics, Bulletin No. 240 (1918), p. 34. 



statute is presumed, in the absence of his notification to the contrary, 
positive rejections have been few. And in states with optional stat- 
utes there have been a great many purely voluntary elections of the 
compensation system by employers who have been under no con- 
straint of fear that they might have to face suits at law without theit 
old-time common-law defenses. So in California in 19 18 there had 
been more than 20,000 such voluntary elections which had been 
formally notified to the Industrial Accident Commission, and in 
addition to these an unknown number of others which had been 
legally implied by the taking out of compensation insurance.^ And, 
in fact, a good part of the liberalizing amendments to which reference 
has been made have had the support of employers, or even have been 
proposed by them. 

Employees have become even more cordial than employers in their 
approval. Unorganized laborers, of course, on the farms and else- 
where, never were on record, or even heard, as to their wishes about 
workmen's compensation. But organized laborers, as a rule, were at 
first skeptical or positively hostile. It was but natural that the 
representatives and spokesmen of the labor unions, knowing little 
about the measures proposed for their avowed benefit, and by 
outsiders at that, should be doubtful of the real advantage to them- 
selves. The verdicts for large sums now and then won in personal- 
injury actions loomed in their minds as the grand prizes of the lottery 
loom in the minds of ticket-holders. And they did not appreciate 
fairly the fact that the compensation awards, limited although they 
might be, would come very much oftener than the rich damage ver- 
dicts. In 1909 Mr. Samuel Gompers, as president of the American 
Federation of Labor, declared his preference for an improved em- 
ployers' liability law. Two years later the president of the Con- 
necticut Federation of Labor appeared in his official capacity at a 
legislative hearing to oppose a pending workmen's compensation bill, 
announcing that the organized laborers of Connecticut wished rather 
a simple abolition of the common-law principle of the fellow servant. 

^Report of the Commission for 1917-1918, p. 6. Hereafter in this article 
definite references usually will not be cited for statements based upon official 
reports of the various compensation boards and commissions. In most cases 
the statements themselves will indicate sufficiently the source of the authority, 
the state, and the year, and any interested reader will find the page without 


i 'I 


In Illinois the opposition to early proposals of workmen's com- 
pensation had some of its sharpest, even bitterest expressions by 
organized laborers. But now, after a few years of experience with 
compensation, laborers, both organized and unorganized are gen- 
erally enthusiastically in favor of it, not necessarily in its present 
tvpical form and with its commonest limitations, but certainly as a 
general principle and in contrast with employers' liability Perhaps 
the great railwav unions, to whose highly paid members the modest 
maxima of the ordinary compensation awards appear particularly 
unjust, are the only important bodies of laborers who cannot be 
considered as now having renounced their former hostility. . . . 

But much more to the point, under the American system of govern- 
ment is the fact that the constitutionality and the general legal 
proprietv of workmen's compensation may be said to be now definitely 
established- established, that is, beyond any possibility of unsettling. 
For they have been affirmed abundantly in the highest courts, both 
state and federal. Early unfavorable decisions in Montana, New 
York, and Kentucky, and in lower courts elsewhere, have been made 
quite' negligible by changes in the provisions upon which they turned, 
by constitutional amendments,^ and by the accumulated weight of 
later favorable opinions. Of these there have been a great many, 
perhaps fully half a hundred by now, which may be said to have 
covered questions of constitutionality, sustaining the statutes of more 
than a score of the states, some of them of the so-called optional type 
and some directly compulsory.'^ It is true that the scope of some of 

1 \s in New York, Ohio, California, and Wyoming. The New York amend- 
ment of November 4, iQU (Article I, Section 19), is of general interest in politi- 
cal science, as a perfect illustration of the popular recall, or reversal, of a judi- 
cial decision Both in form and in substance it is nothing else. It made not a 
word of change in existing provisions of the constitution, but merely declared 
in effect, that the decision of the Court of Appeals in the Ives case -which 
had annulled the compensation statute of igio-was reversed, or '"ecalled. It 
enacted simply that " nothing in this constitution shall be construed to limit 
the power of the legislature to enact laws for" [compulsory workmen s com- 

^'"optloial : Illinois, Iowa, Kansas, Louisiana, Kentucky, Massachusetts, 
Michigan, Minnesota, Montana, New Hampshire, New Jersey, Ohio, Oregon, 
Pennsylvania, Rhode Island, Texas, West Virginia, Wisconsin. Compulsory : 
California, Hawaii, New York, Washington, Wyoming. Perhaps other states 
should be added. It would be gratuitous, and tedious also, to keep the list 
up to date. 



the favorable judicial opinions is not quite so comprehensive as at 
times is assumed and that, therefore, their weight is not quite so 
overwhelming as the list of states might indicate.^ But none the 
less it is now entirely safe to conclude that no attack upon any essen- 
tial feature of either optional or compulsory compensation statutes 
will prevail in the highest courts, whether state or national. Not- 
withstanding volumes of overfine analysis and distinctions, the one 
strictly vital question is whether an employer may free himself from 
the obligation to pay compensation by proving his own freedom from 
negligence or fault. And that he may not claim such a right, in the face 
of a statutory declaration to the contrary, is determined sufficiently 
in at least five decisions from the Supreme Court of the United States,- 
to say nothing of a score or more of cases in state supreme courts. 

It therefore may be taken for settled that henceforward the work- 
men's compensation system is to be a part of our industrial order. 
If there were less adequate sanction for it in definite principles of law, 
strictly construed, there still would be abundant sanction in the great 
principle — legal, too, in a sense — which Justice Holmes invoked 
in 191 1 in his epoch-making opinion in the Noble bank case.^ 

It may be said in a general way that the police power extends to 
all the great public needs. It may be put forth in aid of what is 
sanctioned by usage, or held by the prevailing morality and strong 
and preponderant opinion to be greatly and immediately necessary 
to the public welfare. 

In view of this principle, it well might be that a decisive con- 
sideration in favor of the constitutionality of the compensation acts 
should be found in that prompt and general legislative acceptance and 
that present popular approval to which attention has been turned. 

^The early favorable decision in Wisconsin, in the case of Borgnis et al. 
V. Falk Co., 147 Wise. 327; 133 N. W. 209, has been cited as authority in 
nearly all of the later decisions sustaining the optional statutes. But the Wis- 
consin law does not abrogate the defense of assumed risks in so far as the risks 
are "inherent" or "necessary." Accordingly, the Falk decision cannot properly 
be cited as authority for sustaining laws which do abrogate the doctrine of 
assumed risks completely'. 

^Northern Pacific Raihvay Co. v. Meese, 229 U.S. 614; N. Y. C. R. R. Co. 
V. White, 243 U. S. 188 ; Hawkins v. Bleakley, 243 U. S. 210 ; Mountain Timber 
Co. v. State of Washington, 243 U.S. 219; Middleton v. Texas Power and 
Light Co., 249 U. S. 152. 

^ Noble State Bank v. Haskell, 219 U.S. 104, iii. 






as being the best comprehensive -"-;- ^,y ,erve as 

perhaps say the only o-s S"c^^^^^^^^ imputations. Mr. Hoffman 
the basis for some ^"gg^""^/°"°f^j^i industrial accidents a year 
estimates that there are some ^ 5^°°^'^' . disabling for more 

in the country and abou 700^^^^^^^^^^ ^,„,„,,,,,e year .9x3 

than four weeks. In f^^^^^''^ hoard had reports of 96,382 non- 
_t9U, the accden boaj^ ^"^J ^^^^^^^ ,,, „ore than 
fatal injuries. Of these 55, "3 f^^f'^^^ ,ent, disabled for 

one day; and of these, ^-^'Sr^Z^^'^ durations of disabilities 
more than four weeks. « */ f^'J" ,, ^ whole, then we have 

as in Massachusetts hold for the co"nuy ^^^ 

each year some 3,355,8oo -^fl^jX^'J,:7.^n.Ue accidents. 
„,ore than one day and no ^^^ *^" 5^^°;°j,, g^and totals of corn- 
There have been no attempts to^um up g .^ ^ ^^^^^ ^^^ 
pensation awards for all of the ^^ates-^o ^^^^^.^^ 

Lessary effort to do - J^^J* /^S: li data that items are 
are such changes of method n the prese ^^ ^^^^^.^ 

of varied or uncertain -g-tonc- "-^^ ^^.^ unfortunately, 
typical figures from several of the '^tes, hg ^^^ ^^^^ ^^^^_ 

are not generally or doseb-co^^^^^^^^^ ^„,j j„„, 3,, ,,.8, 

fits actually pa.d from the be.m ^^ ^^^ ^^^_^^^^^ 

had amounted to S5,i44,ooo, in The losses reported 

medical care, making thus a total of $6,9 7,°°- T^ ^j ;„;, 

under the comprehensive '"^"f "«?"_,,, g In California 

amounted to ^^'^'^f ^'";t:sa^^3" ooo'fr m anuary r, :9U, 
there had been awards of at least $3,370,° _^^^g 

to December 31, '9-7- In Ontario in the y ^^^ 

^eK awnrH^ to the amount of 5?9»332,524^ ^^^'^^ 
there were -sh aw^ ds ° t ^^^^^^^^ .„ ,j,^ a.^^ six year. 

provision of medical care. ^^ 1,0,253,000 in cash and 

of compensation there were a ^^^^ 

medical care. In the first three and a half years ot 
law benefits to workmen whose employers ^«%"°' "/^^Z 
own risks, about 85 per cent of all, amounted to «36,6 ' 000^ 

> Paragraph inserted fro. same author in U.S. Bureau of Labor StaUsfcs, 
Bulletin No. 212 (1916), PP- 359-377- 

Large as these figures are, they become more impressive when it 
is noted that in each case the periods covered include the first years 
of compensation experience, when a number of conditions combine 
to keep pavments, and even awards, far below the heights to which 
they naturally soon must rise. After a few more years of experi- 
ence the amounts of the benefits will be much greater than they are 
now. So, of the total of $9,332,500 awarded in Ontario in four years 
no less than $3,5i4,6oo belongs to the one year 1918, when medical 
care to the amount of $370,000 was also provided. In Pennsylvania 
ini9i7 the second year of compensation, benefits paid and awarded 
amounted to $7,161,000, while the figure for the next year was $11,- 
640000. In Illinois, in the single year 191 7, cash benefits to the 
amount of $4,906,000 were paid. And of the $20,250,000 awarded 
in Massachusetts in six years $4,647^500 was for the latest year re- 
ported upon, 19 1 8. r 1 • 
Yet even in Massachusetts the awards are still far short of their 
normal maximum. Even if there should be no increase in the number 
of injuries or in the scales of benefits, and if workers already have 
learned fully about the law and never neglect to claim their rights 
under it, the maximum cannot be reached until after 1924. For it 
was in 1 9 14 that the term for the payments of benefits for fatal in- 
juries was extended to 500 weeks, approximately ten years. And so 
it is in other states. Since there are many states which allow 500 
weeks or ten years of payments for death and permanent disability, 
as well as a number which continue payments on account of these 
same injuries during the life of the beneficiary, it is clear that it must 
be a great many years before the stoppage of payments which will 
have run their full term will balance the payments which will be 
starting anew. But all influences must be counted at their true 
weight*^ So far as the sums paid on awards may be increased by the 
growth of industry and its personnel or by a rise of wages pari passu 
with general prices, there may be no change either in the real value 
of the benefits for those who receive them or in the real burden which 
the awards place upon industry. But so far as injuries may become 
more frequent or more serious through the introduction of more 
powerful or more rapid machinery or through the taking on of new 
and untrained operatives, or so far as workers may seize more fully 
the advantages which the laws offer them or even may lean more 


1- 1 oe fViPv annear to have done in certain Eu- 

^;-::^Sie r .?I^ S... ..e . ..e . ^^^^^^^ 

CylrZpZ too, that the laws will be made more compreh^v 
1 not only will be extended to the few states which now do not hav 

them but everywhere will come to cover workers more generally^ B 
them, but every ^ ^^^ ^^^^^^^^ ^j,^^,^, 

Terer' om to m7e moreTiber;i allowances than had been developed 
nXsSusetts in .,.8, the total for all of the states wou be n 
far from $125,000,000 or $150,000,000 a year. If he experience o 
Penns^^^^^^^^^ New York be taken as an indication of what is to 

come, the figures must be placed higher, P^^^P^^^^^^^^^^^ 

Such sums for a probable future are truly enormous. But wnen 
the amounts now paH out or likely soon to be paid o^t^a few o^^^^^^^^^^^ 
eral millions yearly in a single large state and a few ^^n^reds 
thousands or even less in smaller states, are -eraged over Oi^^^^^^^^^ 
numbers of beneficiaries they do not appear large. For it must no 
b™ rg ttl that a great many persons are the victims of indu^^^^^^ 
accidents each year. Thus the total payments in ^^ ™-^^^^^^^ 
practicallv the whole of her compensation -P^^^^' ^^J'^^^ 
tember i,' iQU, to June 30, 1918, reduce to about an even Si 00 for 
eaTh compensated injury, cash benefits and medical care both included^ 
Other states show rather lower average figures. In C.Uforma in 96 
the average payment in all compensated cases was ^93^-. In lo^^^^^ 
total benefits averaged $63.71 in iQi? and $9046 m 1918. In Massa 
chu etts during the first five years of the law the average costs 
per case for all payments, as actually made and estimated to be 
outstanding, were: 1913. ^40-53; iQU, ^43-58; iQi.- ^43-0^^ 

■thrifSr.''. .h. s-^e ....... ch.™...r „ n., .e^ 

instructive. They are not fairly comparable one with anc>then Th^ 
run in terms of a vague general average of widely different par 
ticulars- and thev are affected in many ways by the situations in the 
several states. The more recent the institution of the compensation 
system the wider the difference between awards and actual payments 
And the provisions of the statutes vary so widely, as to ratings of 
iLudwig Bernhard, Unerwiinschtc Folgen der deutschen SozialpoUtik. 



awards, extent of medical care, duration of payments, and so on, that 
general averages yield no real information as to what compensations 
are received for definite injuries under definite conditions. 

It is somewhat more instructive to consider the awards made for 
specific injuries, of which the practical consequences may be under- 
stood readily. For fatal injuries the average award made in Connec- 
ticut in 1915 was $2269. In Illinois in the same year awards for the 
same injury averaged almost exactly the same — $2 2 73. In Cali- 
fornia the awards averaged S2445 in 1917 and $2625 in 1918. In 
Pennsylvania for 1916, 1917, and 1918 the figures were $2383, S2272, 
and $2659. In the first year of the New York law, awards for fatal 
injuries averaged $3241. In Oregon, in the two-year period 191 5- 
1917, the awards, where there were dependents, averaged $5752. In 
Massachusetts, for the first five years the figures were $1367, $1781, 
$2970, $2603, and S2631. In Ohio in 1915 the amount was S3098. 
Perhaps it will be accurate enough to put the general average for all 
of the states at about S3000, or something less. 

The payment of from $2500 to S3000 is manifestly inadequate 
compensation for the death of a breadwinner. None can deny that. 
But it must be remembered that the purpose of the statutes never yet 
has been to make full compensation for the pecuniary losses due to 
injuries. The pertinent question is whether such amounts, painfully 
inadequate as they are, are not greater than the amounts paid and re- 
ceived on account of the death of industrial workers before the com- 
pensation system was introduced. And, in this connection, it will not 
do to raise for comparison the sums awarded by way of damages in 
suits at law. Probably such damages did amount to considerably 
more than $3000, on an average. But they came only after pro- 
tracted and expensive litigation, so that their net amounts for suc- 
cessful litigants should be reduced much for purposes of comparison 
with present compensation awards, which are made more promptly 
and with only trifling cost to the beneficiary, or none at all. When 
due allowances have been made for direct and indirect costs of liti- 
gation, a $3000 verdict, or even S5000 or $10,000, becomes a much 
smaller thing than at first it appears to be. But even more important 
is the sad fact that, when employees were killed at their tasks, suits 
at law were not always brought and pushed to a successful issue. In 
a great majority of the cases no suit was brought. And such suits as 


were brought were not always won by the plaintiffs. For much the 
larger number of fatal injuries there was either no payment at all or 
only such payment, large or small, as the employer might feel in- 
clined to offer. And in all too many cases he felt inclmed to offer 
nothing, or only a piteously small sum. 

For information upon this unpleasant subject there are now no 
more valuable data than the figures presented by the state commis- 
sions of inquiry which reported some ten years ago with reference to 
the desirability of enacting compensation laws. These show that m 
great numbers of cases employers, even some of the largest and most 
prosperous of them, frequently neglected to make any payment what- 
ever to the dependents of those who had been killed in their service. 
In many cases money was paid, but in sums so petty as to be little 
better than nothing-$5o, Sioo, or perhaps a little more. Cases in 
which the payments ran in thousands were extremely rare. It may be 
a not unfair sweeping generalization to say that under the so-called 
liability laws payments of any amount were not made in more than a 
third of the cases of fatal injury to employees. And the average of 
the sums actually paid would be in the small hundreds. A careful 
study has shown that in Pennsylvania shortly before the passage of 
the compensation act the average amount paid on account of fatal 
injuries was $261,^ at a time when under the compensation laws of 
Connecticut and Ohio the corresponding figures were $2269 and 
S3098. The next year in Pennsylvania the average compensation 
award on account of fatal injuries was S2383, while in 1918 it was 
S2659, a little more than ten times as much as had been secured under 

the liability laws. 

There can be no reasonable doubt that the compensation awards 
made for fatal injuries do mean a large increase from the petty and 
uncertain sums which dependents received under the liability laws 
The differences appear so great in the loose comparisons which it is 
possible to make that, to a complete certainty, they could not dis- 
appear after the fullest collation of data. Indeed, the differences now 
apparent may quite as likely be below the reality as above it. And it 
must not be forgotten that such sums as now are received come 
promptly and without appreciable costs to the recipients. It is true 
that much the greater number of compensation awards for fatal 

HJ. S. Bureau of Labor Statistics, Bulletin No. 217 (1918), p. 107. 




injuries, as for other injuries, are paid in a continued series of small 
sums, not at once in a lump, and that in so far the awards must be 
discounted for purposes of close comparison with the payments 
made in full at one time under the old order. But again the differ- 
ence in amounts is so much in favor of the compensation awards that 
a full discounting of them could not bring them down to or near the 
level of the liability payments. It might, indeed, not be unreasonable 
to maintain that, on the whole, the series of continued small pay- 
ments are the better arrangement for beneficiaries. That, at least, has 
been the judgment of those who made the compensation laws. 

An examination of the compensation awards for nonfatal injuries 
leads to similar conclusions. In Pennsylvania the awards for the 
loss of an eye in the three years 19 16-19 18 were $959, $1065, and 
$1198. In Wisconsin in the four years 1914-1918 the cash awards, 
aside from medical care, for the loss of an eye were S990, $1033, 
$1033, and $1078. In California in 191 7, the first year with relevant 
reports, the average award for the loss of an eye was $1137. These 
figures too are pathetically small. But unquestionably they show 
payments much greater than were made for the loss of an eye before 
the days of workmen's compensation. 

If it be true that the compensation system has meant the payment 
of much larger sums to those who have suffered from industrial acci- 
dents, it should be quite safe to infer at once that injured workers 
and their dependents have been made much better off. There is, of 
course, a possibility that in a given case the compensation award 
may prove of little real advantage to the recipient, or of no advantage 
at all. But such cases must be so very exceptional that they need not 
be considered. It is, therefore, almost a work of supererogation to 
show in definite detail that recipients actually have been benefited. 
Yet this has been done. A painstaking study, carried out under the 
United States Bureau of Labor Statistics, has traced the uses and 
consequences of the compensation awards in a number of concrete 
cases. ^ And the results are exactly such as were to be anticipated. 
It appears that in Connecticut and Ohio there was an unmistakable 
effect in preserving family life for the dependents of those who had 

1" Effect of Workmen's Compensation Laws in Diminishing the Necessity of 
Industrial Employment of Women and Children," U. S. Bureau of Labor Statistics, 
Bulletin No. 217 (1918). 



been killed or permanently disabled. Children were enabled to con- 
tinue at school. Mothers were enabled to remain in their normal re- 
lations to their families. The Ohio Industrial Commission has issued 
a bulletin devoted wholly to showing the uses made of lump-sum P^^^^ 
ments on account of death and permanent disabilities. The bulletin 
is illustrated profusely. And the pictures of tidy little homes bought 
and of modest business places established with the lump sums 
bring one almost to the point of declaring it a happy fate for an Ohio 
woman to lose her husband by an industrial accident . 

If the compensation system has increased severalfold the pittances 
which formerly were paid to the victims of industrial accidents, that 
in itself is enough to justify the system fully. But workmen s com- 
pensation laws may have far more beneficent effects than can be seen 
in the payment of any awards for injuries, however liberal these may 
be It is vastly better to prevent disablement, maiming, and death 
than to provide even the most generous allowances to the injured 
and to the dependents of the slain. And, while in the years of agita- 
tion for workmen's compensation perhaps the greatest stress ordi- 
narily was laid upon the assurance of pecuniary indemmfications for 
injuries suffered, few American advocates of the compensation bills 
failed to claim that the proposed measures might be expected to re- 
duce the numbers of accidents. Indeed, it would be unfair not to 
allow that the more earnest advocates were always fully aware of the 
possibilities of accident prevention which lay in their proposals. 
If they did emphasize the other consideration, probably it was be- 
cause of a well-grounded conviction that there was more persuasive 
ar-ument in it. To state results which must follow at once, directly 
and in definitelv measurable magnitudes, was likely to be more ef- 
fective argument than to make claims which, in the nature of 
the case, it would be impossible to prove, at least to the conviction of 
an interested doubter. 

And it is not seriously to be questioned that already the American 
compensation laws have benefited workmen, and other classes 
as well, much more by stimulating intelligent and successful cam- 
paigns for industrial safety than by adding some millions to the 
yearly payments on account of accidents which have happened. . . . 
Some of the largest of American employers and many of the 
smaller ones had well-organized plans and agencies for the reduction 



of accidents among their employees. And results were developing, 
as appears from several reports of undeniable significance. Statis- 
tics of the safety movement in the iron and steel industry and in 
machine making, which have been published by the United States 
Bureau of Labor Statistics,^ show reductions of accident frequency 
and severity more rapid before there were any American compensa- 
tion laws than later. Substantially similar is the lesson from the coal- 
mining industry, as its figures have been prepared by the United 
States Bureau of Mines. . . . 

But more might be said. It would be ungracious now, when 
American employers are so hearty in their support of compensation, 
to attempt to say how many of them there are who were induced to 
begin or to quicken their efforts for the safety of their workpeople 
simply and solely by the fact that the new compensation laws made 
accidents expensive for the business, or more expensive than before. 
Moreover, such an attempt would fail of any definite success. And 
so this unpleasant topic may be dismissed with the brief but confident 
statement that there were many such employers. Of this all are 
convinced who have watched closely the bringing in of the com- 
pensation statutes in one or more of the states. There was sinister 
significance in the objections which employers raised against any 
compensation enactments, in their strong efforts to weaken the pro- 
visions of bills which promised to become laws or to prevent the 
inclusion of themselves under them, and in their panic eagerness for 
the adoption of safety measures and appliances as the laws went 
into effect. There is, therefore, no doubt whatever that in the 
directest possible way the compensation laws have conduced to the 
promotion of safety policies, and thus to the saving of life and limb, 
by exacting more money from employers in whose service injuries 
are suffered. 

It is not possible to reach any safe conclusion as to the actual 
effects of the compensation movement, or the compensation statutes, 
in the promotion of industrial safety by a superficial reading of the 
general statistics of accidents during the few years since the Amer- 
ican laws have been in force. Perhaps it will be impossible to reach 
any such conclusion of general validity by any use of the current 
statistics. For the influences which the compensation laws must be 

1 As in its Bulletins Nos. 234 and 216. 

nresumed to have exercised have been blended with other influences. 
As in Europe in earlier years, so now in the United States the com- 
pensation laws, with their requirement of a return of industrial ac- 
cidents and with their promise of money to the injured, n.ust tend 
for years to increase the returns of accidents, even while there may 
be no increase of actual numbers. And nobody knows how important 
this consideration is or how long it will continue to be important 
Acrain there were, as has been seen above, unmistakable downward 
trends in the American accident rates, at least in certain important 
industries, before the era of compensation. And nobody can tell 
how much of a later decline might be merely a continuance of this 
early movement. Still further, large account must be taken of the 
industrial conditions brought in by the great war. An influence in 
modern times always making for higher accident rates is in the 
technical progress and the expansion of industries generally. The 
appliances of modern industry are ever becoming vaster and more 
powerful, and their speed is ever faster. The tension is ever higher 
The labor force is ever being augmented by the taking on of new and 
untrained operatives. And all of these conditions and tendencies 
have been found in abnormal degree in American industry during 
these past four or five years, while the compensation laws have been 

taking effect. 

WTiile then, there has been of late years one large force (the gen- 
eral safe'ty movement developed under the compensation laws and 
independently of them) making for greater safety in American in- 
dustry or for an appearance of it, as reflected in the statistical returns 
of accidents, there have been two making in the opposite direction 
(the progress and expansion of industry and the fuller reports which 
the compensation laws secure). Accordingly, there is nothing sur- 
prising in the fact that nearly all state reports show larger and 
larger numbers of accidents and probably would show also an increas- 
ing rate of accident frequency if the figures were all presented in 
such manner as to reveal the true situation. Nor is there anything 
highly instructive in this same fact, at least there is not anything def- 
initely instructive as to the effect of compensation laws upon accident 
frequency or severity. It is, indeed, rather disconcerting, at first 
glance, to read that the accidents reported to the ISIassachusetts 
Industrial Accident Board rose from 90,631 in 1912-1913, the first 



year, to 174,372 in 1916-1917, and that corresponding figures for 
Maryland rose from 20,348 in 191 5 to 42,570 in 1918, for West 
Virginia from 11,418 in 19 13 to 24,379 in 19 18, for Washington 
from 11,896 in 19 13 to 27,306 in 19 18, and in New York from 
225,391 in 1915 to 286,871 in 1918. But these typical increases 
are explained easily by a reference to the familiar forces mentioned 
just above, and most largely by the industrial conditions of the war 
period. So in Massachusetts the rise in the number of reported 
accidents was surprisingly small until the war began to show its 
influence. The increase was only from 90,631 to 95,769 between 
1912-1913 and 1914-1915, or less than 6 per cent; whereas in the 
next two years there was an increase of more than 80 per cent. 
In Washington the increase from 1912 to 1915 was only from 11,896 
to 13,162 ; whereas in the following three years the accidents more 
than doubled. 

Indeed, it is reasonably clear, where careful and comparable re- 
turns of accident frequency are to be had for a term of years, that 
the campaigns for safety have had their natural influence uninter- 
ruptedly throughout these latest years of unprecedented industrial 
activity. There are important branches of American industry, not un- 
affected by war conditions, in which some influence — presumptively 
the general movement for safety — has been operating continuously 
against the unfavorable influences arising out of the war and finally 
has overcome them. This pleasant truth may be read in the table on 
page 32 showing total accident frequencies per 1000 three-hundred-day 
workers in certain plants or industries. 

That the tendency toward a lower accident rate, where this is 
to be observed, has been due mainly if not entirely to the efforts 
of employers, the employed, the insurance companies, and the pub- 
lic authorities to promote industrial safety is not difficult of proof. 
But the proof is not to be found in general accident statistics, 
which at their best can but show the joint effect of several com- 
bined forces. It is to be seen rather in the a priori certainty that 
to cover dangerous machinery and in a thousand other ways to 
fence against the ascertained cause of accidents must make for 
safety, and in the records of a great number of individual employers. 
The records of certain few very large corporations, as the United 
States Steel Corporation and the International Harvester Company 







[ > 








1905 ■ 

1906 . 

1 90S 


1 9 16 



1 89 

I 12 


' ' 5 





1" 1 


1 1 1 














(if it be not invidious to cite employers who are conspicuous rather 
for size than for any superiority of their plans or motives), have 
become a part of the world's best-known economic data. But there 
are many smaller employers who have records quite as creditable. 
It is not' profitable to elaborate the obvious. And if anyone doubts 
the efficiency of well-organized and persistent efforts after industrial 
safety, he may find most impressive evidence in the records of es- 
tablishments with safety appliances and in organizations and estab- 
lishments without them. In iron and steel mills of three groups 
the total accident frequency, per 1000 three-hundred-day workers, 
was found to be 167. i, 272.4, and 507.9, according as the plants 
had safety svstems fully developed, in course of development, or 
not developed at all.- In machine-building plants the accident 
frequency was found to differ as follows in three groups of plants, 
according as there was or was not a good safety organization: 

1 Column I represents one large steel mill with from 4575 to 10,862 employees, 
and column 2 represents a group of smaller steel mills with from 27,632 to 
108004 employees. Both of these sets of figures are from the U.S. Bureau ot 
Labor Statistics, Bulletin No. 234, PP- i5-i6. Column 3 represents iron and 
steel mills amounting to about half of the industry in the United States, and 
the data are from the U. S. Bureau of Labor Statistics, Monthly Labor Rev.iew 
Vol. VIII, No. 6 (1019), p. 234- Column 4 shows fatal accidents only m coal 
mining, as reported by the U. S. Bureau of Mines. 

2U.S. Bureau of Labor Statistics, Bulletin No. 234 (1918), p. 204. 

electrical apparatus, 65.1 v. 185.6; locomotive engines and other 
engines, 119.5 v. 141. 7; machine tools, 42.1 v. 123.4.^ . . . 

The compensation movement, if not in every state the very com- 
pensation acts themselves, is providing a highly important form of 
practical education. It is giving us our first real and exact knowledge 
about industrial accidents in the United States. Before the era of 
the compensation laws there was not a single state in the country 
whose accident statistics were of any real value. It is, indeed, in- 
teresting to observe that the broad, general estimates of the total 
numbers of industrial injuries in this country which had been made in 
recent years are being substantially confirmed by the increasingly 
full and reliable returns which now are coming in. Mr. F. L. Hoff- 
man's well-known estimate of some 25,000 killed each year and 
about 700,000 disabled for at least four weeks- is finding substan- 
tial verification in the reports which now are coming from the com- 
pensation commissions. The latest available returns for several of 
the states show total injuries and fatalities as follows : 


California (1917) • ■ ■ 
Illinois (1918) .... 

Maryland (1918) . . . 

Massachusetts (1917) . . 

New York (1918) . . . 

Pennsylvania (191S) . . 

Washington (1918) . . 

West Virginia {1918) . . 






















When there was no better authority for such frightful figures than 
estimates, it was possible to doubt their truth. Many would not 
believe that American industry was killing three workers every hour 
of the year, night and day, and was wounding some millions an- 
nually ; but now it is becoming more and more difficult to deny the 
facts. The reports of the compensation commissions are doing more 
than to give a terrible confirmation of early estimates. They give 
also much additional information as to the nature of the injuries, 

^ U. S. Bureau of Labor Statistics, Bulletin No. 216 (1917), p. 43. 
-U.S. Bureau of Labor Statistics, Bulletin No. 155, p. 6. 



..e. physical and social ^^^^::^Zl d^^Tn 

the way ot reguianiy, , ,. . ^ accident statistics 

AcadrB^rand commissions. And as the standa^ .^s a. 
„.ore generally adopted for the return of accident eP° '^ 'f^ ^^ 
accumulate a mass of statistical data -h>ch w, 1 be oMhe bghe 
value in every way. These will the country "^^"^^^^ 
of the reality and magnitude of one of our greatest '"dustnal ev.K 
Then we may trust that American publ.c opmion will no tolerate 
Iny neg ecTof remedies. But the mass of scientific data for 
wTare coming into the debt of the compensation laws wll do more 
;i rur/ublic opimon. U wm P-^^-heonlybas-s or sound 
and hopeful policies of prevention and pall.a .on. t ^^H do mo^c 
even than that: it will help-is already helpmg-to humanize m 
dustrjand industrial relations by showing how P-fcable -d 
exnSent it is for twentieth-century business to adopt m its human 
Xtnf principles and methods as well -sidered and as^ 
specialized as those which long have been taken as a matter of course 

in other relations. ^ c.^(mxt 

The effects of the compensation system in the promotion of safety 
are none the less real because the appeal to selfish and heartless em- 
pbvers is not made directly in the commonest form of statute but 
ind rectly and through practices developed under the statutes. For, 
^hTthe most common form of statute does lay "Pon ^^^^^^^^^^ 
an obligation to make payments on account of ^^^^^^^ental inju les 
suffered in his service, it also directs him to insure his liabilities, and 
thus limits his costs to the definite amount of his insurance premiums^ 
Accordingly, it has been said by some that the employers direct 
business Inducements to make his work-places safe are diminished 
not increased. For the moment this may appear to be true. But 
it is not true. For in connection with the state funds, which often 
are established as agencies of insurance, either f ^1"^^^^. .^^%;^"^ 
Washington, Ohio, and other states) or «P^^«"^\^^^/^^7''^ I^J. ^^^^ 
in New York, Pennsylvania, California, and elsewhere), provision 
always is made in the statutes for at least some partial adjustment o 
premiums to the accident rates of the insured, either individually or 



by groups. And it cannot be doubted that the statutes and their 
provisions for insurance have been drafted in the reasonable expecta- 
tion that private insurance carriers also would vary their premium 
charges in accordance with the same general principle. 

And in actual practice one of the most interesting and gratifying 
developments under the compensation system in America is seen in 
the careful and unremitting endeavors of all insurers — state funds, 
insurance companies, and mutual associations alike — to work out 
a sound rule for making premium rates depend in part upon the 
employer's efforts or success in safeguarding his work -places. Both 
the principles of discrimination adopted and the practical measures 
for carrying them into effect vary. There are open questions as to 
the relative weights to be assigned to the accident rates actually 
developed in experience (experience rating) and to conformity to 
prescribed standards of safety (schedule rating). There are also un- 
answered questions as to the extent to which individual conditions 
and experience may be considered without departure from the sound 
essential principle of all insurance ; that is, the principle of pooling 
the individual in the collective group of the insured. It is not neces- 
sary here to outline the excellent work which has been done by 
numbers of very capable insurance experts in their attempts to solve 
such problems. But it must not be forgotten that much of the best 
thought of the insurance companies and of the compensation com- 
missions is devoted to the working out of plans which may combine 
sound insurance procedure with the utmost practicable allowances and 
penalties for observance and neglect of approved safety measures. 

And there are still other ways, at least as important, in which 
compensation insurance has conduced to the safety of industrial em- 
ployees. Once the insurer has contracted for his premiums, it is 
clear that he stands to gain the more — to save the more of the 
premiums for his own profit — the more he can reduce the accidents 
of the insured below the numbers upon which the premiums were- 
computed. And, at the same time, he may encourage his insured 
to hope that a reduced accident rate will mean a reduced premium 
for the next policy period. Thus we find that, as a matter of the 
most obvious business interest, all sellers of compensation insurance 
seek constantly to improve their risks, by inspections, by counsels 
of safety, and by the preparation and urging of all manner of safety 




policies and appliances. Very fortunate, indeed, it is that corpo- 
rations with resources as great as those of the large insurance compa- 
nies find it unmistakably good business to work for the safeguarding 
of industry. Nothing has done more to clear private sellers of com- 
pensation insurance from the charge of heartlessly exploitmg human 
misfortune for their own profit than their intelligent and persistent 
endeavors to make work-places ever safer. Nothing can be more 
likelv to preserve for them their present rights in a large and expand- 
ing field of enterprise. At first individually, company by cornpany, 
but more recentlv chiefly through their specially constituted asso- 
ciations and bureaus, and sometimes in friendly conference with repre- 
sentatives of the state compensation commissions, private insurance 
carriers have done a most admirable work in devising and recom- 
mending plans for the safe construction, equipment, and management 
of factories, mines, and other work-places. Their provisions for the 
human element, that is, against the so-called moral hazards, are 

scarcely less elaborate. 

Whenever, as often under the statutes, those who employ large 
numbers are allowed to dispense with formal insurance and to 
"carry their own risks," workmen's compensation tends m the 
simpfest and most direct way to promote safety. In all such cases 
emplovers know that each injury means so much direct cost to 
themselves and that, therefore, it is for their own immediate business 
advantage to reduce accidents to the lowest possible figures. Essen- 
tially so it is also with all genuinely mutual insurance associations. 
The conclusion, therefore, is fully warranted that compensation 
insurance, with its merit ratings, does contribute largely to the 
contemporary- movements for industrial safety. And both insurance 
and the merit ratings were contemplated in the workmen's com- 
pensation legislation generally, even in the states where they were not 
expressly required by the statutes. Here, then, is the happiest con- 
sequence of the compensation system. It certainly is well if many 
millions of money have been added to the sums formerly received 
as indemnity and solace for the losses and sufferings entailed 
upon workmen's families by industrial accidents. But it is rnuch 
better in everv way if, as is not unlikely, some few thousands of 
lives are saved each year and some scores or hundreds of thousands 
of injuries prevented. 



It must be confessed that, except as they did bring in compensa- 
tion insurance and its merit ratings, the compensation laws have 
not done much for industrial safety. Not often have they prescribed 
rules or standards of safety or even conferred powers of inspection. 
This, however, has been because such matters have been left to dis- 
tinct statutes and distinct offices. In California there was a tem- 
porary change of policy. For the revised compensation act of 19 13, 
replacing substantially the act of 191 1, was made up in considerable 
part of sections devoted specifically and exclusively to the direct 
promotion of safety in industry; and the act itself was legally 
designated the "Workmen's Compensation and Safety Act." But 
in 191 7 the safety sections were entirely removed to a separate 
statute. Other states, as a rule, have followed the plan of separate 
statutes from the first. At present there are only about a dozen 
states which make any provision for accident prevention in their 
compensation acts. Doubtless there are real advantages in some 
measure of coordination or unification in the two lines of activity. 
But the present degree of separation is not as great as might 
appear. For in many of the states there are industrial commissions 
with general authority over all administration of laws affecting labor, 
workmen's compensation laws, factory-inspection laws, safety laws, 
and the rest. And it can make but trifling difference whether pub- 
lic regulations which a given office is to administer are found in 
different parts of one statute or in different statutes. 

In the critically important matter of fixing compensation-insurance 
rates, whether for the state funds or for private insurers, the 
framers of the statutes usually have thought it sufficient to take 
account of the actually developed accident experience of industries or 
groups of industries. Rarely have they thought it well to sanction 
schedule ratings ; that is, ratings based upon conformity to approved 
standards of safety.^ The terms of typical statutes, as in Ohio, un- 
mistakably contemplate no other principle of merit rating than such 
as may be derived from the accident experience of the insured. 
There are statutes, as in Kentucky and Virginia, which in general 
terms authorize "merit rating," while others authorize or direct 
"schedule rating," with or without a fair implication that the words 

^As a matter of fact, legislatures and their draftsmen knew very little 
about the different principles and methods of iiierit rating. 




are to be taken in their technical meaning. Only in a few of the 
states as ii Colorado from the first, in Michigan, New Jersey, Penn- 
svlvania and now since 1917 in Washington, is there express and 
defink anction for the adjustment of premium -^es with reference 
to physical and moral conditions in plants, as distmgmshed from 
accfden r tes revealed in experience. Accordingly, the state com- 
mS n practically limiting themselves to experience ratings m their 
r nStion of the state funds, have been much less " ^^^^ 
nrivate insurers in their use of a most powerful force for the promo 
C ndus^ial safety. The provisions of the P-syWa^^^^^^^^^^^ 
and of recent amendments in New Jersey and Washmgton may 
indicate that this important fact is coming to be recogmzed m pubhc 
Dlaces If so, a change for the better may be m prospect. 
"^ But even without large use of this efficacious means ^^me o 
the site commissions have produced gratifying results. They have 
conducted extensive educational campaigns ; they have made in- 
spect"!^^^ examined and recommended safety devices established 
safety exhibitions and museums, and widely scattered helpful printed 
r^aterials The California Industrial Accident Commission long 
has issued a valuable illustrated Calilornia Sajety ^^ws^^^^^^ 
not have failed to do much good. The same commission conducted 
a special campaign for safety in mining industries, with the appar- 
Lt e u t that fatal accidents in California mining fell from 20 m 
X0X6 to 10 in X917. In 1914 the Massachusetts Industna Acci- 
dent Board carried on for three months a campaign for safety in 
establishments with some S5,ooo employees. And a comparison 
of accident rates for half-year periods before and after the campaign 
shows a reduction of 20.8 per cent in the total number of accidents^ 
It is by discriminating attention to experiments and reports like the 
two just mentioned -not by observing the broad, genera movements 
of accident rates-that one may come to his best conclusions as to 
the effects of the compensation laws in making industry safer. . . . 
So far then, it would appear that the compensation system has 
had no appreciable direct effect upon business. Nor, in the nature 
of the case, can there have been any large, direct effects. The 
sinc^le new influence to work directly is the weight of the com- 
pensation costs as an addition to the expenses of doing business. 
And on the average, these costs cannot have figured for much. 



Clearly their magnitude is shown by the premiums for compensation 
insurance. And these, varying from a minor fraction of i per cent 
of the pay roll in most textile mills to several per cent in structural 
iron work, mining, and other specially dangerous operations, may 
perhaps be generalized at about i per cent, or a little more.^ And 
such a cost, a cost of such amount and of such character, can, have 
no great effect upon the total expenses of producing, upon necessary 
prices of products, or upon demands for goods. 

The addition of i per cent to labor costs becomes an addition of 
about one fifth of i per cent to total costs when account is taken 
of the fact that labor, as in manufacturing, figures at about one fifth 
of all costs. In other industries, as in mining, labor counts for much 
more. But the costs of compensation, of compensation insurance, 
are not a net addition to the employers' business expenses. Some- 
thing employers paid in former days on account of industrial acci- 
dents. The largest item was the amount paid for employers' liability 
insurance. But there were other items also — the small sums given 
occasionally in direct and gratuitous settlements of claims, the costs 
of litigation, and the rest. So that the immediate net increase in 
the costs of production or business must be much less than the present 
costs of compensation insurance. In fact, there have been official 
claims for several of the states that the new system costs employers 
no more than the old.' Something still further must be allowed in 
reduction of the fair charge against compensation. Better medical 
care for injured employees and larger cash benefits for them make 
the interruptions of their work less prolonged and less disturbing to 
the orderly course of the business. 

When all due allowances have been made for these reactions of 
the compensation system, as for others which might be added, 

^In Montana, where employments cannot be especially free from dangers, 
1 per cent is the official estimate of the costs for the two years 1917-1918. In 
West Virginia, where also mining is an important industry, the general 
average of premiums for 1916-IQ17 was 1.41 per cent. In Wisconsin during 
1913-1916 it was 1.33 per cent. In the exclusive state funds the premiums or 
assessments are lower. But the question of true costs is so much involved with 
other subordinate questions that it cannot be answered in a convincing manner 
without elaborate expositions and discussions. The variety of Wisconsin indus- 
tries and the different agencies of insurance operating in that state perhaps 
make Wisconsin figures as instructive as any. 

2 Montana Industrial Accident Board, I9i8-(i9i9, pp. 28-29. 





possibly there may still appear some trifling increase in the direct 
costs of industry. But trifling, indeed, must the mcrease be And 
such as it may be, it bears upon producers in nearly a 1 branches o 
industry, taking the word in its narrower meaning, and m nearly all 
parts of the dvilized world. Its true and final effects, therefore, 
can be ascertained only by elaborate and somewhat profound analyses 
and by careful examinations of industrial conditions, such as would 
in themselves constitute an important study in economic theory. Are 
modern producers' profits so high that from them can be taken these 
trifling net additions to costs? If not, will the producers' necessary 
increase of his selling prices appear in a corresponding mcrease m 
consumers' costs? If so, will demand be turned from the products 
of those who have to pay compensations to the products of those who 
do not have to pay, as from manufactured goods to agricultural 
products ' Or will consumers find their purchasing power commen- 
surate with the higher prices, because they receive compensation 
benefits or are enabled to work and earn better, or are relieved 
somewhat from charges for the care of victims of industrial acci- 
dents' These and still remoter questions need not be answered 
now We may rest content in a reasonable confidence that, as no 
disturbances because of workmen's compensation have been observed 
in the industr>- of the United States or of foreign lands, so none 
which can possibly come can outweigh, or even approximately bal- 
ance, the business and social advantages which already have been 

derived from that same system. , . , .. , 

There are other consequences of the compensation legislation al- 
ready apparent. As it has been humanizing industry, so it has been 
humanizing judicial opinion, which in America is so powerful for 
social good or evil. One need not be an extremist in order to believe 
that the great body of our judicial reasoning about social relations 
has been a dry and lifeless formalism, showing little recognition of 
what it meant for the life and welfare of human beings. An eminent 
New England jurist, still living, once declared, in a decision from 
the bench that the atrocious fellow-servant doctrine rested upon 
"considerations of right and justice.'" Now such a complete dis- 
regard of the human significance of the law never is found in the 
compensation decisions. Rather the judges in a score of courts vie 
iHoxie V. New York, New Haven, and Hartjord R. R. Co., 82 Conn. 352. 




with one another in praising the humane wisdom of the compensation 
acts and declaring their purpose of interpreting them in no narrow 
and technical sense, but broadly and liberally and in such manner 
as to get the fullest practical effect to their noble humanitarianism ! 

Let still other observed consequences of the compensation system 
be passed over now. But mention must be made, if only the briefest, 
of certain serious defects in the present statutes, which have devel- 
oped in practical experience. It would not do to dwell only upon the 
merits of the American compensation system, with never a word 
about its defects.^ 

To leave the enforcement of the injured worker's rights to the law 
courts has been proved, in New Jersey ^ and elsewhere, practically 
to nullify the provisions of the statutes in great numbers of cases. 
"The administration of American justice is not impartial, the rich 
and poor do not stand on an equality before the law, the traditional 
method of providing justice has operated to close the doors of the 
courts to the poor, and has caused a gross denial of justice in all 
parts of the country to millions of persons."^ Yet there remain com- 
pensation states, north, east, south, and west, which have constituted 
no special administrative boards. The sums paid under the acts for 
medical care have been proved generally to be most wisely and 
helpfully expended, hastening cures and thus benefiting both the 
injured and the employer. Yet there are but four or five states which 


1 For the most part the defects may be regarded as merely shortcomings, as 
merely preventing a full realization of the advantages which might be derived 
from a compensation system. But in some few respects workmen have been 
made positively worse off by the compensation acts. As men who have been 
disabled or maimed are more than ordinarily liable to accident, such appear 
to find their opportunities of employment diminished somewhat (U. S. Bureau 
of Labor Statistics, Monthly Labor Review, Vol. IX, No. i (1919), pp. 206- 
207). More important is the fact that the compensation laws, making recov- 
eries under the employers' liability law practically impossible, shut off from 
any relief the workers whose injuries are not provided for by way of com- 
pensation awards; that is, broadly speaking, those whose disabilities do not 
continue beyond the prescribed waiting period — a week or ten days, more or 
less. But, since most of these many thousands would have been unable to 
secure relief under the liability system, the evil is not enormous. But it is real. 

2 " Three Years under the New Jersey Workmen's Compensation Law," report 
by the American Association for Labor Legislation. 

•■'"Justice and the Poor," Carnegie Foundation for the Advancement of 
Teaching, Bulletin 13, p. 8. 



do not limit the extent of provision for curative treatments, by 
ftxincr a maximum either of amount or of time. The waitmg period, 
during which no benefits accrue, still is two weeks in some states 
and ten days in many. Yet experience shows that not far ^om three 
fourths of all disabilities cease within two weeks. In Oregon m 
101^-1017 when there was no waiting period, it was found that a 
waiting period of one week would have cut off 35-38 per cent of the 
injured from their awards, while two weeks would have cut off 62 per 
cent While to manv prosperous persons it may appear a small mat- 
ter to have income suspended for two weeks or less, it is by no 
means a small matter to the hundreds of thousands who have the 
experience each year in this country because they have been injured 
while at work. Failure of the employer to insure his liabilities often 
makes it impossible for the injured to secure their promised benefits. 
Yet there still are several states which make no requirement of in- 
surance The limitation of awards to those whose injuries have been 
of accidental origin has raised many perplexing questions as to what 
is an accident and has cut off from compensation a great many vic- 
tims of industrial diseases and of exposures of one sort and another. 
A defect deserving of special attention is the inadequacy of the 
schedules of awards. About these there is much misunderstanding 
The amounts of compensation, in nearly all cases, are stated as such 
or such a percentage of current earnings, as less than 50 per cen 
in several states and under certain conditions, 50 per cent in about 
half of the states, 55 in two or three, 60 in some fifteen, 65 m two 
or three, and 66% in the rest. But these figures exaggerate the 
benefits actually paid, being maxima which cannot be reached under 
many common conditions of earnings, dependence, and the hke. 
Moreover, they are qualified in most of the states by the provisions 
that no matter how high the actual earnings, the awards may not 
be above some maximum, as S12 a week, more or less, and that no 
matter how long disability may continue, payments must cease after 
a while The Minnesota commissioner of labor estimates that in 
his state while the nominal rate was 60 per cent, the awards in 
cases of temporary disability were but 38 per cent of the direct wage 
loss in 1916-1917 and but 48 per cent in 1917-1918. It is a cruel 
mockery to present as half pay, or two thirds, a series of payments 
which may cease while yet the injured person is to live through a 



long period of disability. It is scarcely less cruel to modify a nomi- 
nal half or two thirds of pay by a fixed maximum of $15, $12, $10, 
The highly paid railway employees have understood this all 


the time. And nowadays it is being realized by many others. To 
what extent present schedules of awards might be raised need not 
be asked here. ]Most of them were fixed before the war period and 
its enhanced costs of living; and the present height of prices has 
forced a number of increases in the schedules,^ but not enough. They 
still are generally too low. It is the amount actually paid that counts. 
Be it remembered that actual awards for fatal injuries average from 
$2500 to $3000, while the terms of the statutes commonly put into 
readers' minds thoughts of $5000 or more. 

Much the greatest defect of the American compensation statutes 
is their lack of comprehensiveness. In a recent issue of the Monthly 
Labor Review, Mr. Carl Hookstadt estimated that in the so-called 
compensation states there were not less than 7,400,000 employees 
who were not covered at all by the statutes. Some of these, a mil- 
lion and a quarter of them, are in interstate commerce, where there 
are special but not insuperable difficulties in providing coverage. 
But the greater number, more than six millions, have been deliber- 
ately left out or excluded by state legislatures. The reasons are well 
known. There are strange beliefs as to the needlessness of compensa- 
tions in occupations which, with or without good reasons, are counted 
as not hazardous. There are rather discreditable deferences to the 
prejudices of such classes as the farmers. And there are other minor 
reasons. But the fact remains that nearly a third of the employees 
in the so-called compensation states are in no wise affected by the 
statutes. An estimate of the United States Bureau of Labor Statistics 
indicates that nine of the compensation states cover less than half of 
their employees and that only eighteen cover as many as two thirds. 
And these estimates assume that in the states with optional acts there 
have been no rejections by employers. 

The net result of all this is that the present American compen- 
sation system is much narrower in its application than we in our 
optimism might suppose. In Kansas, with her population of more 
than a million and a half, there were in 19 14 only 806 compensation 

1 U. S. Bureau of Labor Statistics, Monthly Labor Review, Vol. IX, No. 4 
(1919), p. 245. 


awards of all sorts; while in 1917-1918, after the waiting period 
had been reduced from two weeks to one, cash awards were made 
only at the rate of 191 6 a year. In New Hampshire, with a popula- 
tion of some 450,000, there were in 1914 but 404 awards; and the 
latest report of the Bureau of Labor makes no mention of compen- 
sation awards. In Nebraska, with nearly a million and a half of 
people, there were in 191 5 but 605 awards. In the same state, m 
the calendar year 1917, but $67,028.73 was paid for all cash benefits, 
and in the first ten months of 191 8 but $65,362.74. Can such states 
fairly be counted as having compensation laws? But even in the 
states which make the best showings only a small minority of the 
injuries suffered are followed by compensation awards. There are 
few states in which the figure is as high as 20 per cent. In California, 
where the compensation law had been in operation five or six years 
and had been administered by a capable and alert commission, there 
were in 191 7 only 14,313 awards for temporary disability, although 
there were 107,420 temporary disabilities reported. 

The sum of it all is that the American compensation laws have 
proved fairly their beneficence but cannot be supposed to have 
attained their final forms. Either a superficial observation of the 
contemporary course of legislation or a closer examination of the 
underlying conditions which appear to direct it will yield reasons for 
believing that the compensation system will be extended and that 
its provisions will be made more liberal than they are at present. 

WiLLARD C. Fisher 

New York Uni\'ersity 



THE right of a government to coerce its citizens into insuring for 
those contingencies against which experience has proved that 
they are unable to protect themselves has been asserted not alone by 
Great Britain's Prussian enemy and eight other European nations but 
by democratic and individualistic England herself. The presentation 
of a bill for compulsory health insurance to the British Parliament 
in 191 1 was the more remarkable since 5,500,000 of the more thrifty 
British workmen were then voluntarily insured against sickness 
through friendly societies and trade-unions. This voluntary insur- 
ance, however, did not provide for those who most needed it — the 
less thrifty, the more poorly paid, those to whom sickness was a 
greater disaster — who are now included within the compulsory 
system. To these 8,000,000 workers the only assured protection was 
that offered by the charitable societies and the poor law, with its 
hated stigma of ''pauper." To the British this provision seemed 
wholly insufficient, and under the commanding leadership of Lloyd 
George a bill for compulsory health insurance embracing all workers 
was introduced into Parliament in May of 191 1. It was passed the 
following December, came into operation in July of 191 2, and six 
months later benefits became payable. 

Included within this "national health insurance," as it is termed 
in Great Britain, are all persons between sixteen and seventy em- 
ployed for remuneration under any form of contract, if engaged in 
manual labor or if the rate of their annual earnings is less than $800.- 
Within this classification numerically unimportant exemptions of 
individuals or the exclusion of occupations may be granted by the 
commissioners for reasons established by the act. Untouched by its 
compulsory provisions are air those working independently — the 

^From American Labor Legislation Review, Vol. VI (1916), pp. 127-137. 
2 The income limit has been raised to $1250 by the amending act of 1919. 


■i 1 \ 


small shopkeeper, the village carpenter or the cobbler, all of whom 
have no emplover and whose insurance would be difficult to enforce. 
Those employed within the meaning of the act and insured durmg the 
first year, 1912, numbered 13,472.000, or nearly 30 per cent of the 

total population. • i j • 

The benefits to which these 13,472,000 workers are entitled m- 
elude medical care, sanatorium treatment if attacked by tuberculosis, 
a cash benefit at the time of childbirth, a weekly payment during 
twenty-six weeks of illness in a year, and a smaller weekly sum dur- 
ing prolonged disability. 

The medical benefit guaranteed to each person insured for halt a 
year consists of medical treatment, medicines, and specified appli- 
ances. This benefit is administered by insurance committees, which 
are appointed for definite areas to represent insured persons, doctors, 
and the local government of the administrative district. These com- 
mittees arrange for the medical care of the insured workmen in 
accordance with regulations of the central administrative body, the 
insurance commission, and then draw up a list or '^ panel" of physi- 
cians who have agreed to the terms. These arrangements must ob- 
serve two fundamental conditions: first, the right of every duly 
qualified physician who wishes to serve upon the panel to be placed 
upon it, provided he is not proved injurious to the service ; and, 
second, the right of each insured person to select his physician 
from among those on the panel. For the remuneration of physicians 
a minimum of Si. 68 and a maximum of $1.80 is annually set aside 
for the medical care of each insured person, regardless of the amount 
of medical attention he may require. This sum, exclusive of the 
cost of drugs and appliances, is nearly twice the average physician's 
income before the insurance act, estimated upon the basis of per 
capita of the population. Under these conditions about 20,000 
doctors in England, Scotland, and Wales have undertaken insurance 
practice. This in various districts represents from 70 to 100 per cent 
of the medical profession practicing among the industrial population. 
Sanatorium benefit for the tuberculous insured is provided through 
the insurance committees, which make arrangements for sanatorium 
treatment with the local authorities. 

A weekly sick benefit for a maximum of twenty-six weeks in a 
year is granted to each insured person not over seventy years of age 



who has paid twenty-six contributions, and who produces a certificate 
from his panel doctor that he is incapable of work. Ten shillings 
($2.40) a week for men and seven shillings sixpence ($1.80) a 
week for women is the legally established benefit paid by each 
society approved under the act. 

A disablement benefit of five shillings ($1.20) a week is paid to 
both men and women, insured for two years, when the illness extends 
beyond the twenty -six weeks covered by sickness benefit. This 
payment continues for the entire duration of the incapacity and 
ceases only when the insured reaches seventy, when an old-age pen- 
sion of equal amount is due him under the old-age pensions act. 

The maternity benefit of $7.20 (exclusive of medical attendance) 
provided for the wife of each insured man as well as for each in- 
sured woman is one of the most popular and the most easily admin- 
istered features. This payment, made solely to help defray the 
expenses of confinement without regard to incapacity either before 
or after, is to be distinguished from sickness benefit. Indeed, the 
receipt of a maternity benefit debars the insured mother from the 
right to receive sickness benefit for the four weeks immediately 
following confinement. 

The cost of these five benefits involving a large total annual ex- 
penditure is divided among the worker, the employer, and the state. 
Each insured man pays 8 cents weekly, an insured woman 6 cents, 
the employer 6 cents weekly for each employee, man or woman, 
while the state contributes an additional 4 cents. With the exception 
of the low-paid worker earning less than at the rate of 60 cents a 
day, for whom the employer and the state pay a larger proportion of 
the contribution, this rate is uniform for all age or wage groups and 
for all occupations, regardless of the sickness hazard of the industry. 

This flat-rate contribution, a distinguishing feature of the British 
system, is based upon the cost of providing a person of sixteen with 
all the benefits until seventy, and with medical and sanatorium bene- 
fits throughout life. It allows for the heavier claims of later life by 
charging the person of sixteen m7)re than his benefits at that age ac- 
tually cost. By this method a reserve is accumulated from which the 
claims of middle life may be met. To estimate this cost the sick- 
ness tables of the Manchester Unity— one of the old and well- 
managed friendly societies— were used after they had been adjusted 



to allow for a different distribution of age, occupation, and civil 
status among the compulsorily insured population. In this calculation 
it was assumed that each of the approved societies carrymg .nsurance 
would have its fair proportion of the average distribution of risks, 
and that no one society would depart radically from the average in 
a..e distribution, in occupational hazards represented, or in propor- 
tion of married and unmarried members. The actuaries, however, 
«ere unable to find any suitable table for women, and accorfing to 
their own admission they used the adjusted Manchester Unity table 
■without modification" to measure the probable rates of sickness 
among women. Upon these assumptions the attempt was made to 
determine once for all the liabilities of this gigantic new system o 
national insurance and to fix a uniform contribution which would 
be sufficient for future expenses among all societies. 

A uniform contribution for the various ages entering insurance at 
the inauguration of the system was possible only by crediting to 
tho^e over sixteen the amount which, had they been insured from 
Ihe'age of sixteen, would have accumulated to their credit to pay for 
the heavier claims of old age. Accordingly a "reserve value was 
credited to each person over sixteen included within the act, making 
an aggregate total of 8432,000,000. This huge sum at first appeared 
only as a book credit. To convert this into cash, and at the same 
time to provide interest on the capital sum, nearly one fifth of each 
week-s contribution is diverted to writing down the reserves, a 
process which it was originally estimated would require eighteen to 
twentv years. ^Vhen the reserves have been converted into cash, 
the released one fifth may be used for increasing the benefits estab- 
lished in the present act. , • .• „ 
The financial side of the act centers around the approved societies 
which are the real carriers of insurance, paying cash benefits to their 
members and reimbursing the insurance committees for expenditures 
connected with medical and sanatorium benefits. 

The approved societies, of which there are 23,500 independent 
societies, lodges, and courts, are in some cases the old friendly 
.The amount set aside from each weekly contribution has been reduced by 
the amending act of igiS. The sums thus released have been used to mcrease 
h money available for the payment of cash f""- ^eneM for women and 
to create various special funds established by the amending act. See footnotes 
I and 2, p. so. 



societies approved for the purposes of the act, some have been or- 
ganized by trade-unions, and still others are special societies modeled 
after the friendly societies and organized to administer national 
health insurance. Following the prerogative of the friendly society, 
each insured person is given an unrestricted right to select his society, 
and each society may reject an applicant on any ground save that 
of age. Thus it may limit its membership to those who are members 
of a trade-union, to those who are engaged in a particular occupation, 
or to total abstainers, etc. The great discretionary power given to 
the societies to administer their own affairs is a keynote of the 
British system. In theory each society of over 5000 members is 
financially independent, its solvency depending upon its own suc- 
cessful administration. If the expenditure is in excess of the actuarial 
expectancy, a deficiency will result which the society must make 
good, either through a levy upon its members or by a reduction in 
its benefits. Temporary provisions for persons who might be refused 
and for those not desiring to join a society were supplied by the 
"deposit contributors' fund," under the control of the insurance 

A segregation of the insured persons by trade has in some cases 
resulted from the freedom of the insured to choose his society and 
from restrictions placed upon membership by the societies them- 
selves. In the words of the interim report of the departmental com- 
mittee on approved society finance and administration, "Insured 
persons were allowed, were, indeed, urged, to segregate themselves 
into societies that seemed to promise satisfactory results, and the 
prospect was held out to them that they would derive a direct benefit 
from the wisdom of the choice of a society. In other words. Parlia- 
ment contemplated in one fundamental aspect a departure from the 
fundamental working of a flat-rate system." This trade segrega- 
tion, whether a favorable one, as in the case of bank clerks and 
domestic servants, or an unfavorable one, as in the case of cotton- 
mill operatives, miners, and boot and shoe workers, carried with it 
the isolation of trade risk far Ijelow or far above the average occu- 
pational hazard for the entire insured population for which the 
flat-rate contribution was calculated. The uniform contribution cal- 
culated for the average is frequently insufficient for the worse risks, 
and a society may therefore be threatened with a deficiency, since 



I I 


each is financially independent and is unable to benefit from the 
uiu of another having a more favorable selection of membe s 
ThTdeficiency from this cause actually threatenmg some soc.etie. 
has proved a serious matter to two departmental committees The 
'e'ommendatfens of both were the same; namely that a portion o^ 
•he reserve fund be set aside to form a " special-nsks fund from 
which sodeties having an unfavorable selection of lives m.ght recoup 
^emsdves. This assistance to individual societies '---^j;- 
though the sickness benefits for men, taken as a whole, are withm 
the actuarial expectation/ 

Moreover, a 'variation from the normal distribut.on of woma, 
has presented grave financial questions to other The sick- 
ness rates for women, it has been pointed out, were assumed m the 
absence of other evidence, to be the same as those '"■•men^ Ex- 
perience has shown that sickness among smgle women is m excess 
of the expected rate, while that of married women is even more ex- 
cessive This means that the women are now receivmg more than 
their contributions entitle them to. To remedy the s.tuat.on con- 
tributions should be increased or the benefits reduced. This funda- 
mental remedy has been shunned by two departmental committees 
in succession, and the same solution has been proposed by both,- 
that of diverting part of the reserve funds to supply the immediate 
needs To meet the more numerous daims of married women, due 
in Dart to the demands for sickness benefit during pregnancy, un- 
foreseen by the actuaries, still a third invasion upon the reserve 
funds, coupled with a parliamentary grant, is contemplated by both 

committees .- 

iThe amending act of 1Q18 has met the problem of unequal-sickness ex- 

o^r rend^LT^^^^^^^^ which are cau^d^^ f ^^^^^^^ 

ing from occupational hazard or by other causes over which the society has 

"^'Thelmending act of 1918 has provided for the excess sickness among 
- The amenmng acL o y available for paymg benetits 

"m n XTu^ s ;btined by subtracting this V.d. from the amounts 
originaTly seraside for writing down the re.rves. The amendmg act also 


In contrast to this segregation, a widely scattered membership 
without geographical or trade grouping may result from the same 
freedom in selecting a society. This situation, though unaccompanied 
by the same financial dangers, has its grave disadvantages. For 
example, because the members of a community or industry are in- 
sured in hundreds or even thousands of societies with other persons, 
it is difficult to discover an excessive amount of sickness for that 
group. Without this knowledge it is of course more difficult to take 
preventive steps. Moreover, a membership distributed throughout 
the entire kingdom has materially hindered the development of any- 
thing like an effective system of sick visiting ; it is even a question 
with one society actually insuring millions of workers whether a 
complete system, reaching out to the tiny isolated villages, will pay 
for itself. Without such a system the ratio of unnecessary claims 
will be somewhat higher than when they are closely watched, as they 
can be with a concentrated membership. 

The conclusion to be drawn from this British experience with a 
flat-rate contribution and with free choice of carriers is twofold. First 
the two when dependent on each other are undesirable. A flat-rate 
contribution is clearly impossible when there is unrestricted freedom 
in the selection of the society, because of the segregation of special 
risks which may and does result. Secondly, even if the flat rate is not 
combined with choice of approved society and if all possibility of 
segregation of risks is eliminated by prescribing the carrier, a flat 
rate is still undesirable. iMrst, it is impossible to foretell accurately 
the liabilities even upon the most accurately prepared sickness data. 
The error in the sickness rates of women made by the British ac- 
tuaries is an example. Secondly, the contribution is regarded as 
permanent by the contributors, and any attempt to change it is 
resisted. Hence, as in Great Britain, initial mistakes in the financial 
estimates must be rectified from some other source. The same op- 
position to any increase i^ the contributions has been manifested 
when the purpose has been to increase the facilities of the insurance 
system. As a result, such additional expenditures have been met 

provides for the higher sickness rate among married women by establishing the 
women's equalization fund derived from parliamentary grants. This fund 
IS to be apportioned among the approved societies with reference to the number 
of married women members. 

■I If J 
'Iff I 





bv Darliamentary grants when as a matter of justice the increased 

£orn sl'ud h^v; been derived from the insurance payments^ The 

system of free choice of carrier, even if unaccompanied by a flat^rate 

ontrLtion, is in itself undesirable. The -- segre^^^^^^^^^^^ me- 

te dlerence in the weekly contribution, assummg .t made a d.f- 

E?of^-m-nc:^^^^^^^^^^ -f = 

-i;: rn^af ^rf^uTt^::^^^^^^^^^^^^ system, it is importan. 

tolear in mind, are due to the attempt to forecast once for aU t me 

he CO t of the nsurance, in which the government actuaries faded, 

!■ nHlvto the ironclad nature of the contributions and bene- 

and, secondly to the roncla ^^^.^.^^^^ .^^^^^ ^^^^ 

htt:t "tel a e'd^f-ts which the flexible average premium 
ystem adopted by the German act and in successful operation now 
rmore thL a .uarter ^;^J^^:i^Z:^^ which 
^'^T'"l;1ir;rt r,hl^ committees and the 

c^af i sTar oiToters. The administration of medical and 
sanator um benehts, although duties naturally falling upon the ap- 
nroved sodeties have been farmed out to the insurance committees 
Tcaut oh greater ease in administration when the membersh^ 
?s localized The insurance committees -which require dupli ate 
ecord' Tncrease the staff of workers, and thus add to the cost of 
!, :L rXn-are a cumbersome effort to provide for local ad- 
SS: L p::ndple of which has been violated by the present 

"'?rcrraratilCit:;Ssted to four commissions, one 


for each of the four countries England, Ireland, Scotland, and Wales, 
and a joint committee which coordinates their activities.' It is these 
five bodies, jointly referred to as the commission, which make the 
extensive regulations for the administration of the act, and which 
supervise the approved societies and insurance committees, endeavor- 
ing as far as possible to make the practices uniform throughout the 
kingdom. Here too there is unnecessary duplication in administra- 
tive force, necessitated by the strong feeling for "home rule," which 
is not fonfined to Ireland alone. 

Notwithstanding, however, the unfortunate systems of finance and 
of administration which have been adopted, the beneficial effects of 
the act are quite evident. During the first year of benefits (January, 
1913-January, 19 14) 3,600,000 persons are calculated to have had 
sick benefit, or about 25 per cent of those insured, an experience 
which roughly corresponds with the financial estimates. This has 
involved an expenditure of $30,000,000 for the entire kingdom. The 
disablement benefit, which really covers permanent invalidity, was 
expected to involve an expenditure of $9,700,000 in 1915, thus in- 
creasing by one third the amount spent in sickness benefit. Its fi- 
nancial success, for which there were many fears before it came into 
operation in July of 1914, is revealed in the recent interim report 
of the departmental committee on approved society finance and 
administration. The committee states that during the first eighteen 
months the expenditure was within the actuarial expectation for that 
period, but that in the future it is possible that the disablement 
benefit for women, and especially for married women, may involve a 
heavier charge than originally anticipated. The combined effect 
of the medical care and the provision of cash benefit is that many 
who previously had dragged along without medical advice, forcing 
themselves day by day to work in spite of illness, have now for the 
first time had proper attention. Physicians have said, " I thought 
I knew how much illness there was in my neighborhood, but 
I had no conception of the amount that existed until I was brought 
in contact with it through the act. ... I had no idea that it existed 

1 The Ministry of Health Bill provides that the .work conducted by the 
insurance commissions shall be under this new department, which will also 
direct the health activities previously conducted by other government bodies, 
such as the local government board. 



and was going unrelieved, and that people were d-gg'^g ^^^"/^ 

tlluch mness." An official festigating comm^^^^^^^^ 

"already there are indications that -^ ^"^^ ."J ;,'^4^^^^^^^^ been 
under the act a better comhtion of health has in certa 

• J ♦i^or, v.r.c Vippn exoerienced for many years. 

atta.ned than .'''^^^''^"/^P"™. .^^j^jed went each week of the first 

The maternity benefit, it is calcuiatea, wcui received 

vear to .7,000 mothers, and throughout that yea recel^ed 

maunitv benefit, involving a total expenditure of $7,o°o,oo° The 

at^rinew problem, .hich can be solved only by providing the 
materniU- bene' t in much the same way as medical assistance is 
now provided for insured persons. 

nool dock laborers it is estimated that m half the cases wtiicn re 
Lted s c^^^^^^^ the home would have been broken up and relief 

ught in the workhouse had it not been for the ^^f^^ij^^ ; 
.nr^nce act Charity workers too have found that the calls tor 
financTal r^^^^^^^^^^^^ both in number and in the amount 

of assis ance required. On the other hand, some of the local poor- 

w oS^^^^^ the enlarged use of doctors brought about by 

Z insurance act, which is revealing a larger number -edrng hospUal 
care mav increase the inmates of the poor-law mfirmar es. This, 
o cou^sl is signiftcant of the higher standard of medical c^^^^^^^^^^^ 
the workingman resulting from the insurance provisions. Sanatorium 



benefit, notwithstanding petty jealousies between rival local boards, 
fostered by the administrative system and the inadequate funds at the 
disposal of the insurance committees for their share of the work, 
was received by no fewer than 44,000 insured workers in the first 
eighteen months' operation of the act. Of this number more than 
half were placed in sanatoria, others were treated in dispensaries, and 
still others were cared for in their homes by the panel doctor, under 
the guidance of the tuberculosis officer. To assist in home treatment 
1200 shelters for out-of-door sleeping were available, and in other 
cases milk and eggs were supplied to patients in their homes. 

Moreover, the whole antituberculosis movement has been strength- 
ened. To provide the additional sanatoria necessary for the treat- 
ment of the insured and their dependents provided for in the act, 
Parliament in 191 1 made a grant of $7,200,000 to defray part of the 
expense of sanatoria, whether erected for insured or noninsured. 
Under this generous provision plans for 3000 new beds had been 
made within the first twenty months and grants to the extent of 
$1,287,000 had been either made or promised. Following the rec- 
ommendations of the famous Waldorf Astor committee, that sana- 
torium benefit should be available not only to dependents of the 
insured but to the whole population, the government announced in 
July of 1912 that it was willing to bear one half of the expense 
incurred by the local authorities in treating noninsured persons as 
well as the dependents of insured workers. For this purpose Parlia- 
ment granted $1,464,000 and $2,300,000 for the budget years of 
19 14 and 191 5 respectively. The provisions which have thus far 
been made are but the beginning of an effective crusade against tuber- 
culosis, instigated by the insurance act and originally restricted to 
the insured and their families but later extended to the entire popula- 

If even a cumbersomely conceived plan of health insurance can 
improve health, decrease pauperism, and forge an effective weapon 
against tuberculosis, are not we Americans challenged to devise a 
system which will function more perfectly in our war against poverty 
and disease ? ^ j 

Olga S. Halsey 

American Association for Labor Legislation 







COMPULSORY national unemployment insurance, the second 
Rreat effort of Great Britain to treat unemployment as an mdus- 
trial problem, followed closely upon the inauguration of the labor ex- 
changes Although this provision was planned to accompany he 
measure for labo^ exchanges, the project was withheld untd the plan 
might be perfected and until the exchanges might become an efficient 

adfunct. When a bill was tonally -^^^1"-^"'°/" "Th I cal 
neared as Part II of the National Insurance Act of .911. This came 
Lo operation in July, rpi^, as far as contributions were concerned 
but it was not until six months later, in January, .<)n,i^^^ benefits 
were payable. Amendments affecting details, traceable in part to the 
war, were passed in 1914, 1915- and 1916. -.^j „„„ 

The act aims to cover involuntary unemployment m a limited num- 
ber of occupations through compulsory insurance, to which employ- 
ers the workers, and the state contribute. The compulsory basis was 
adapted as an essential condition for the elimination of unfavorab e 
selection of risks against the fund and to secure the msurance of those 
who could not be reached through voluntary provision. The com- 
Dulsory feature embraces workmen of sixteen and over, employed at 
manual labor under a contract of service in the following trade^: 
building, construction work (such as railroads, docks, harbors, em- 
bankm;nts, etc.), shipbuilding, mechanical engineering (mcluding 
the manufacture of ordnance and firearms), iron founding, construc- 
tion of vehicles, and sawmilling when carried on in connection wi h 
an insured trade or of a kind usually carried on in connection with 
an insured trade. 

iFrom Proceedings of the Conference on Social Insurance, 1916. U.S. 
Bureau of Labor Statistics, Bulletin No. 212, pp. 874-886. 


The workmen thus insured numbered 2,282,324 in January, 1914, 
when the act had been in operation one and a half years. The distri- 
bution of these workmen among the various trades is shown in the 
accompanying table. 

Distribution of Workmen among the Insured Trades, as shown by 
THE Number of Unemployment Books issued to Workers, July, 

1912, to July, 1914 

Insured Trade 

Building ' 

Construction of docks, railroads, canals, etc 


Mechanical engineering 

Construction of vehicles 

Sawmilling (of a kind commonly carried on in an in- 
sured trade) 

Other industries (insured trades which occur in con- 
nection with other industries, and where the non- 
insured industry is main business of the employer) 

Number of 


Books issued 

TO Workers, 

July, 1912, to 

January, 1914 







Per Cent 











1 00.0 

An analysis of the insured workers indicates that 64 per cent were 
skilled, 36 per cent unskilled, and approximately 25 per cent union 
men. The insured include about 10,000 women and 110,000 minors 
between sixteen and eighteen years of age. 

Exemptions within this group may be made by the Board of Trade 
on the ground that the occupations usually are carried on inde- 
pendently of an insured trade or that ihey are common to both in- 
sured and uninsured trades. During the first year three such orders 
were issued. Those in the permanent service of the Crown are also 

Determinations as to whether men are engaged in an insured trade 
are made by the umpire appointed by the Crown. All decisions rest 
upon the provision of the act that the determining factor shall be 
the nature of the work and not the business of the employer. On 




this basis flagmen and lookout men employed by a railway in con- 
nection with construction are not considered as engaged nr an .nsured 
o«upation. The demarcation of insured trades on this prmc.ple has 
proved a technical problem requiring during the first year 1268 pub- 
lished decisions and 10,000 others given in correspondence Not- 
withstanding, the Board of Trade considers demarcation practicable 
The application of insurance to specified occupations only was due 
to the dictates of prudence that the new experiment be confined to 
those trades for which there was the greatest amount of data re- 
garding unemployment. By a happy coincidence these trades are 
"those in which the fluctuations of unemployment are most severe and 
where, therefore, there is the greatest need of protection 

From the outset it was realized that it might prove desirable to 
extend the provisions to other trades, and accordingly power was 
given the Board of Trade to include other occupations, provided 
that it would not increase the parliamentary contribution by inore 
than £1,000,000 ($4,866,500) annually during each of the three 
years foUowing. Resolutions in favor of the universal application 
of the act were passed by the Labor Party at its conference in Feb- 
ruary 1914, while the pressure of the demand from all sides during 
the spring of 19 >4, was felt by the president of the Board of Trade. 
Preparation for extension by a special order was made m regulations 
issued in May, 1914. Further progress, however, was prevented by 
the war until the exceptional development of war industries forcibly 
called attention to the necessity of provision for those whom peace 
and the attending dislocation of trade would throw out of work. 

The cost of insurance is divided equally between the employer and 
the worker, each contributing at the uniform weekly rate of 2/2 d. 
( = 08 cents), while the state contributes one third of this total, or 
i%d (3.38 cents) per week. In the case of boys under eighteen 
the combined contribution of employer and worker is but 2d. (4.06 
cents) weekly. Men employed for less than one week pay a reduced 
contribution of id. (2.03 cents) for employment of one day, 2d. 
(4 06 cents) for two days, and the usual 2/. d. (5.08 cents) for more 
than two days' engagement. On this basis contributions for six days of 
casual employment cost employer and workman 6d. (12.17 cents) 
each as against the normal weekly rate of 2/2 d. (5-o8 cents). The 
greater expenses for casual labor may be avoided by engaging 



laborers through the exchange and by making arrangements whereby 
the exchange pays the contribution. Under these conditions six days' 
work of six different men are reckoned as one week's job for one 
man, and the six-penny contribution is reduced to 21^^. (5.08 cents). 
Advantage of this section was taken by the employers of 95,000 
casual laborers during the first year of operation. The combined 
contributions of workers and employers accumulated a fund of 
£1,622,000 ($7,893,463) during the first year, which was increased 
by the parliamentary contribution of £378,000 ($1,839,537). The 
income of the second year was £1,802,000 ($8,769,433) from em- 
ployers and workers and £602,000 ($2,929,633) from Parliament. 
From this fund, controlled by the Board of Trade, the benefits are 
paid and sums laid away for reserve with which to meet the demands 
of years of exceptional unemployment. 

The contributory basis was considered essential in order to secure 
the interest of employers and workmen in its financial security. Un- 
derlying this practical reason is the assumption that if industry de- 
mands a reserve of labor it should help support it through the lean 
years. The contribution of the workman would seem justified be- 
cause it is he who benefits. The uniform contribution was necessarily 
adopted because of the lack of actual data upon which to grade pay- 
ments in proportion to the hazard of each industry, the age, or the 
wage of each employee. Statistics indicated, however, that there 
was a variation in the incidence and the duration of unemployment 
between different branches of the insured trades, a variation which 
it was planned to meet by granting a weekly benefit of 75. ($1.70) 
in the engineering trade and of 6 s. ($1.46) in the building group. 
This plan did not meet approval, and instead a uniform benefit of 
7 ^. ($1.70) a week for all trades was adopted. 

A modification of the flat rate was provided for the employer of 
regular workmen, for whom a refund of one third of the contribu- 
tions was made for each, man employed continuously for one year and 
for whom at least 45 contributions had been paid. Under this ar- 
rangement, up to March, 1914, an average refund of 3 .^. 6 d. (85.17 
cents) had been made for each of 574,000 workers, or one fourth of 
the insured. Simplifications were introduced by the amending act of 
1914, which stipulated that payment of 45 contributions was sufficient 
to entitle the employer to a refund of 3 ^. ( 73 cents) for each workman 





^0 employed. A similar refund is made to the employee when he has 
reached sixty, if he has made 500 contributions to the fund. He then 
receives the difference between the amount he has contributed and 
that received in benefits, together with compound interest at the rate 
of 23^ per cent a year. This arrangement, which turns insurance into 
a savings fund for the old age of those seldom out of a job, has been 
an important factor in decreasing the hostility of the better workmen, 
who otherwise might feel that the act held nothing for them. 

The possibility that contributions would not be sufficient to meet 
the liabilities imposed by the act was faced from the outset. Pro- 
vision for temporarv advances, not exceeding a total of £3,000,000 
($14 599,500), from the treasury was made in the original act, with 
the proviso that if it should appear that the fund was insolvent the 
treasury might direct the Board of Trade to alter the rates of con- 
tributions or the scale of benefits. After the act has been in operation 
seven years the Board of Trade may revise the rates, adjusting them 
according to the amount of unemployment in each trade, provided, 
however that the contributions of employer and worker shall not be 
increased by more than id. (2.03 cents) each and that the shares of 
employer and employee remain equal. 

The enforcement of the contributions is undertaken by inspectors 
of the Board of Trade, who see that the employers duly pay their own 
and employees' contributions by means of stamps, representing the 
combined contributions, placed in the workers' unemployment books. 
These books are obtained from the labor exchanges, are left with the 
employers for stamping during periods of employment, are re- 
turned to the workers on leaving positions, and are then deposited by 
them at the exchanges when they claim benefits. It is the employer 
who is liable for contributions, but the workman becomes liable if he 
knowingly allows his employer to avoid payment. Prosecutions of 
employers numbered twenty-four during the first year, ending July, 
1013 and convictions were secured in all but one case. Twenty-two 
cases' dealt with the employer's failure to pay the necessary contribu- 
tion and one with an attempt to deduct the contribution from the 
employee's wage. One workman was fined for refusing to apply for 

an unemployment book. 

The payment of the weekly cash benefit of 7 s. (S1.70) to adult un- 
employed workmen began in January, 1913, after contributions had 


been payable for six months. Benefit is not paid during the first 
week of unemployment, is limited to fifteen weeks during the in- 
surance year, and is paid only in the proportion of one week's benefit 
for every five weeks' contributions. In the case of minors, those 
under seventeen receive no benefits and those between seventeen and 
eighteen receive half the benefits of an adult. 

All claims for benefit must be lodged at the local labor exchange, 
where the worker deposits his unemployment book and where he is 
placed automatically upon the list of those looking for work. The 
claimant must then prove his unemployment by signing a register 
at the exchange each day within working hours, or, if he is a union 
man, he may sign the union "vacant" book kept at the union offices 
or at the exchange. As an alternative he may be given a card which 
he carries with him and which he may have stamped by any ex- 
change in the city as he searches for work. The labor-exchange 
officials prefer daily signing at the exchange, because they are able 
to place more easily those with whom they have frequent contact. 

During the first twelve months of benefit (January, 1913, to Janu- 
ary, 1914) a total of 1,144,213 claims to benefit, or a weekly average 
of 22,000, were made. In the early days of the war the weekly 
average increased to 45,000 for August and 33,000 for September, 
1 9 14. Since the first dislocation of industry the weekly quota has 
steadily declined, so that for March, 1915, the weekly average was 
8229; for March, 1916, 3535; and for August, 1916, 1920. This 
decline is reflected in the total number of claims shown in the fol- 
lowing table for 1913, 1914^ 1915^ 1916: 



Numbers of Claims for Unemployment Benefit 

'9^3 ■ ■ f 1,144,213 

^9M 1,220,359 

1915 380,710 

1916(10 months) 122,902 

These claims involved an expenditure of £497,725 ($2,422,178.71) 
^of 1913,^542,499 (82,640,071.38) for I9i4,;£i32,349 ($644,076.41) 
for 1915, and £39,483 ($192,144.02) for the first ten months of 1916. 
Here, too, the effect of the diminished unemployment has made itself 
distinctly felt. 








Payment is made only after it has been ascertained that the statu- 
tory qualifications for benefits have been fulfilled. During the first 
benefit year qualifying conditions threw out 102,000 claims, or 9 per 
cent of the total. 

The first qualification for benefit under the act of 191 1 was em- 
ployment in an insured trade for twenty-six weeks during the past 
five years. Proof of this was especially difficult for nonunion men, 
and although rigid proof was not demanded, the lack of accept- 
able evidence caused 36 per cent of the disallowances during the 
first benefit year. The amending act of 19 14 remedied this difficulty, 
of which unionists complained, by reducing the requirement to the 
payment of ten contributions. The second qualification is the in- 
ability of those capable of work to obtain suitable employment. 
The determination of what is suitable work is one of the nice ques- 
tions which demand a knowledge and a full understanding of the 
conditions of work which a man is justified in refusing. The funda- 
mentals of the decision are laid down in the act ; namely, that a 
man shall not be considered to have refused suitable work if he has 
refused a job vacant because of a strike, or, secondly, if in his own 
neighborhood the wages and the conditions of work are less favor- 
able than those which he has habitually obtained, or, thirdly, if the 
wages and working conditions offered him in another district are 
not those generally observed in that area. This provision, which 
depends wholly upon its interpretation, is, on the whole, being carried 
through in the spirit of the law, according to trade-union critics. 
The accepted standard of wages in districts which are well organized 
is the union rate, while in others wages paid by the better firms have 
become the criterion. 

Men who have fulfilled these conditions must be without work for 
a week, for which no benefit is paid, before they are entitled to bene- 
fit. This so-called waiting week covered 29 per cent of the unem- 
ployment recorded within the first six months of benefits, even 
though this week for which no benefit is paid is credited as the 
waiting period for subsequent unemployment occurring within six 

Since the act aims to cover only involuntary unemployment, it 
disqualifies from benefit men who are out of work because of a trade 
dispute at the factory at which they are employed, those who have 



been discharged for misconduct, and finally those who voluntarily 
leave a position without just cause. In this instance disqualifica- 
tion is limited to a six weeks' period after leaving employment. To 
ascertain these facts a form is sent to the last employer, who is asked 
if the applicant lost his job through any circumstances which should 
disqualify. If no reply is received the local officer is compelled to 
assume that the claim is valid, unless suspicious circumstances sug- 
gest themselves. It is probable that from 10 to 15 per cent of the 
claims are questioned because of the nature of the reply of the 
employer. In the absence of penalty for misstatement from the em- 
ployer the unionists feel that a statement from a prejudicial fore- 
man may deprive a man of benefit unjustly. 

An analysis of disallowed claims showed that disqualifications 
because of a trade dispute accounted for just over 17 per cent of the 
refusals of benefit during the year January, 19 13, to January, 19 14. 
The administration of this clause is unsatisfactory .to the unions, 
because they have been unable to get a general ruling from the 
umpire as to what constitutes a trade dispute and because in specific 
instances they have not agreed as to what constituted a strike or 
lockout. Equally unpopular is the interpretation placed upon the 
act which debars a man from benefit when thrown out of work by a 
strike at his works, even though his department is unemployed only 
because of the absence of the other men. The two remaining dis- 
qualifications — misconduct and voluntary leaving without just 
cause — accounted for 38 per cent of the claims disallowed during the 
same period. In deciding whether a man has just cause for throw- 
ing up a job considerations enter which affect the minimum stand- 
ard of employment — whether a man is justified in refusing to submit 
to working conditions to which he has grown accustomed during the 
last few years or whether he is justified in leaving for a higher wage. 

Provision is m^de in the act for difference of opinion on such 
questions. The insurance officer attached to each of the eight divi- 
sional offices passes upon the claim. If payment is authorized, he 
notifies the local exchange where the claim originated. If the officer 
decides against the workman, the latter may appeal to a court of 
referees. These bodies consist of an impartial and salaried chair- 
man designated by the Board of Trade, and a representative of the 
workers and of the employers drawn from a panel to which the 


^ t 




workers' representatives have been elected and to which the em- 
ployers' have been appointed by the Board of Trade. During the 
first six months of benefit about one out of each twelve disallowed 
claims was appealed to a court of referees. If this court confirms the 
decision of the insurance officer against the workman, this closes the 
case; but if it disagrees, appeal may be carried by the officer to 
the umpire, whose decision is final. His judgment as to whether a 
man has just cause for leaving or whether he has refused suitable 
employment affects the mobility of labor by standardizing the con- 
ditions upon which workers may quit work and still draw benefit. 
These decisions, in the words of the New Statesman, 

have clearly, on the whole, been marked by a conception of the duty 
of the workman to uphold his standard of working conditions which 
is sufticientlv broad-minded and generous to go far toward securing 
the smooth and satisfactory working of the unemployment insurance 
scheme. . . . The system of unemployment insurance is clearly 
capable of being made one of the great bulwarks of the standard of 
life of the working class.^ 

The administrative machinery intrusted to the Board of Trade is 
relatively simple. The United Kingdom is divided into eight divi- 
sions, each of vvhich has charge of the claims in its district and super- 
vises the placement work of the exchanges. The latter handle all the 
initial claims, obtain work if possible, and notify the divisional office 
of the claim. The investigation and authorization of all payments 
is then made by this office, which notifies the local exchange whether 
or not benefit is payable. The exchange then acts upon this notifi- 

The local administration is controlled through Board of Trade 
regulations, which enunciate the procedure followed throughout the 
Kingdom. Further power is centered in the Board of Trade in its 
control over the unemployment fund, subject to the audit of the 
comptroller and auditor general, and in its discretion as to the in- 
vestment of the funds which may be invested by the national debt 

An important adjunct in the administration is the cooperation of 
trade-unions having members in the insured trades. Under section 
105 of the act an "association of workmen" may make arrangements 

^ New Statesman, August i, 1914. 



whereby it pays to its members the benefit they would have received 
under this act. Three fourths of the amount so paid out is then re- 
paid by the Board of Trade. Such an arrangement may be made 
only on the condition that the union itself pays a benefit which is at 
least one third of the state benefit, has some method of proving the 
unemployment of its members and of notifying them of vacant posi- 
tions. In practice the members of unions with such an agreement 
make their initial claim at the exchange and sign the union vacant 
book, which may be kept at the union offices, but which very fre- 
quently is found at the exchange. The claim is then forwarded to 
the divisional office, which reports to the exchange, as in other cases ; 
the exchange then notifies the union secretary, who makes the pay- 
ment, as to whether benefit is authorized. Since repayment to the 
union is made only for benefit which the labor exchanges would have 
paid if the claim had been made to them, it is important that the 
union secretary have the Board of Trade authorization for each 
payment made. At first difficulties were encountered, because the 
warm-hearted branch secretaries thought that they could pay state 
benefit with the same freedom with which they were accustomed to 
pay union out-of-work benefits ; as a result payments were made 
with an unjustified expectation of a refund and consequent disap- 
pointment. It not infrequently happened that failure to obtain the 
anticipated repayment was due to inaccurate union bookkeeping 
which failed to pass the government auditor. 

At the close of the first year, July, 19 13, one hundred and five 
unions, with a membership of 539,775, including practically all 
the unions in the insured trades, had made this arrangement. This 
plan, necessitating the recording of union payments apart from those 
of nonunion men, has been the means of accumulating valuable in- 
formation as to the incidence of unemployment among organized 
and unorganized workers. During the first year of benefits, when 
union men numbered approximately 25 per cent of the insured, 
union claims constituted 28 per cent of the total and absorbed 
26 per cent of the expenditures. In general the unemployment 
of union men was shorter than of nonunionists — an average of 
12.2 days as against 16.2 days. Since August, 1914, the union claims 
have been absorbing a phenomenally increasing proportion of the 
sum spent in benefits, amounting to 47 per cent of the expenditure 





in Januan- and February of 191 6 and falling again to 30 per cent 
of the expenditure in August of 191 6. 

The cooperation with trade-unions has extended to all unions 
giving out-of-work benefit voluntarily to members. Unions, whether 
in insured trades or not, may receive a subsidy of one sixth of the 
total amount expended upon out-of-work benefits up to a maximum 
limit of 175. (S4.14), including the 75. ($1.70) of state benefit. 
Where the total benefit is less than 135. ($3.16), a portion of the 
state 75. (Si. 70) is excluded in reckoning the total. 

The advantages of this section up to July, 19 13, had been claimed 
by 103 unions which also had arrang'^ments under section 105, and in 
addition by 172 unions, with a membership of 376,041, in the nonin- 
sured occupations. A few of the large unions, such as the Durham 
Miners' Association and some of those among the cotton workers, 
have hesitated to apply for the subsidy because of their objection to 
a government audit of this expenditure and to signing an unemploy- 
ment register. 

Less difficulty has been experienced by the trade-unions in claim- 
ing this refund, because the requirements are not as stringent as those 
for a refund under section 105. For example, the statutory qualifi- 
cations are not required in this instance ; all that is necessary is for 
the union to certify that unemployment is not due to a trade dispute. 
The accounts of this expenditure are then subject to government audit 
before repayment. The ease with which unions have obtained the 
refund has been accompanied by departmental difficulties. Objec- 
tion was raised by the war-time committee on retrenchment in public 
expenditure that many claims had been paid without detailed evi- 
dence as to their accuracy. The absence of a receipt from the work- 
man that he had received this benefit and the general lack of proof 
that unemployment had come within the prescribed limitations in- 
creased the difficulties of the committee on public accounts in passing 
claims for repayment. As a result the audits have been slow, and 
amounts have been paid over to associations for which there was no 
proof of correct payment. Dissatisfaction extended to the treasury, 
which felt, according to the committee on public accounts, that a 
more satisfactory basis should be worked out by a special committee. 

A marked reduction in the parliamentary appropriation for this 
purpose was presented in the budget for 191 6-19 17. Instead of the 



annual sum of £70,000 ($340,655) set aside during the first two years 
and of £100,000 ($486,650) for the year 1915-1916, only £25,000 
($121,662.50) appeared in the budget estimates for 1916-1917. The 
combined result of this dissatisfaction, of the exceptional prosperity 
during the war, and of the insistent demand for national economy has 
been the withdrawal of the subsidy of one sixth after May 31, 19 16. 
Protests have been made and a deputation from the trade-union 
congress sought an explanation from the Board of Trade. They were 
told that nothing would be done during the present period of pros- 
perity, but that the question would be reconsidered "when trade 
resumed its normal aspect." 

The war has brought its own peculiar problem as to the insurance 
act. In the early fall of 1914, after the unemployment rate had taken 
a suddenly alarming upward trend, the Board of Trade announced 
that it would give an additional subsidy to trade-unions paying out- 
of-work benefits. Grants were to be made upon the condition that 
there was abnormal unemployment among its members, that the asso- 
ciation was not paying out more than 17 s. (S4.14) weekly in benefits, 
including the state 75. (Si. 70), and that the union would impose a 
special levy upon its employed members. The amount of this emer- 
gency grant was set at one third or one sixth of the benefits (in 
addition to the refund of one sixth already provided in the act), 
depending upon the amount of the weekly levy. Applications for 
this emergency grant were made by 185 associations, with 284,297 
members. Of these, 135 unions (with 221,413 members) were in 
the cotton trade. This grant in aid was paid for expenditure in- 
curred up to the close of May, 191 5, when a total of £84,175 (S409,- 
637.64) had been expended. Of this sum £70,565 ($343,404.57) 
was paid to unions in the textile trades, many of which had held 
aloof from the grant of one sixth under section 106 of the act. 

Unemployment insurance has opened the way for dealing with the 
unemployment problem anticipated on the close of the war. The war 
office announced that it had undertaken to pay unemployment insur- 
ance benefits for one year to those who would be discharged from the 
army, regardless of the trades they entered. The Admiralty have had 
a similar plan under consideration. In the meantime an amending 
act was passed in July of 191 6 extending the provisions of the act 
to those engaged in munition work ; in sawmilling, including machine 


i i 

? J ' 



woodwork and the manufacture of wooden cases ; in the manufacture 
of chemicals, including oils, lubricants, soaps, candles, chemicals, 
paints, and varnishes ; the manufacture of metals, of rubber and 
rubber goods, of leather and leather goods, of bricks, cement, and 
artificial stone. These provisions are expected to include an addi- 
tional 1,500,000 workmen. Extension may be made by the Board 
of Trade where there is a substantial amount of war work being 
done in any trade. In addition, workmen employed in an establish- 
ment in which some are insured may elect to come under the act, 
provided the employer consents. The plan which came into opera- 
tion in September is but a temporary arrangement, in fo^ce for not 
more than five years, or not more than three years after the ter- 
mination of the war, or such shorter period as the Board of Trade 
may determine. 

The finances under the main act thus far have proved perfectly 
satisfactory. These are based upon data relating to the unemploy- 
ment of 540,000 trade-unionists in the insured trades over a period 
of years, data which showed an average rate of unemployment of 8.6 
per cent, or 26.8 days a year after an actuarial weighting. The 
period during which the insurance act has operated has been one of 
phenomenally low rate of unemployment ; at no time, except during 
the fall of 1914, has the rate, minus the actuarial weighting, risen 
above 3 per cent, while the rate for 19 16 has fallen to a fraction of 
I per cent. These favoring circumstances have, of course, colored 
the entire histor\^ of the act. 

The total income of the first year (1912-1913) was £2,011,304 
($9,788,010.92), of which £362,397 (Si,763.6o5) was expended on 
benefits and administration,' leaving a balance of £1,648,907 
($8,024,405.92) for investment. The second year (19 13- 19 14) showed 
a slight increase in income— £2,497,160 ($12,152,429.14), of which 
£896,160 ($4,361,162.64) was spent on benefits and administration, 

iThis does not represent the total spent on administration, since the major 
portion is included in the annual appropriations for labor exchanges. But of 
the total appropriation of £1,167,962 ($5,683,887.07) made for labor exchanges 
and insurance during 1Q16-1Q17, it is impossible to ascertain the amounts 
chargeable to the respective accounts. A substantial share of the administrative 
expense attributable to insurance is covered by the grant of 10 per cent of the 
income derived from employers and workmen, according to the report of the 
committee on retrenchment in public expenditure. 


leaving a balance of £1,601,000 ($7,791,266.50). The period of 
industrial activity during four years has placed the fund in a 
strong financial position, so that in July of 19 16 the fund had 
approximately £6,700,000 ($32,605,550) standing to its credit. 

During this period the act has achieved what it attempted ; namely, 
provision of relief for the unemployed upon a dignified basis. The 
benefit afforded within the limitations of the act proved adequate in 
a study of 130,000 cases during the first six months of benefit. 
Aside from the 29 per cent of the unemployment recorded ac- 
counted for by the waiting week, 9 per cent which was not covered 
by benefit was almost entirely accounted for by the statutory dis- 
qualifications. Less than i per cent of unemployment was uncovered 
because of exhausted benefits. Although the small proportion re- 
maining without the scope of the act presents a flattering picture, 
it must be remembered that men are less likely to claim if they 
have exceeded their allotted portion of benefit. As a result, men 
may be out of work without the knowledge of the Board of Trade. 
The figures are further colored by the fact that they are taken from' 
the early days of the act, before many had had an opportunity to 
exhaust their benefit. 

But the act has done more : it has encouraged the growth of 
voluntary provision. During the initial eighteen months twenty- 
one trade-unions, with a membership of 86,000 in the insured trades, 
which formerly paid no benefit, began an out-of-work benefit. In 
practically all cases the total benefits— including the state 75. 
($1.70) — is below I2S. ($2.92) a week. The subsidy of one sixth 
to other trade-unions has proved less successful, for only three 
trade-unions outside the insured trades had established an out- 
of-work benefit in July, 1914. The explanation of this is two- 
fold : first, that the unions which had not had this benefit feature 
previously were too poor to afford it and, second, that the grant has 
been too small to encourage them m what they still consider a 
perilous undertaking. 

The grants under sections 105 and 106 have, on the whole, tended 
to strengthen the financial position of this trade-union benefit. For 
example, an old and well-established society, such as the Amalga- 
mated Society of Engineers, added the state benefit to its own of 
los. ($2.43). Other societies receiving the subsidy of one sixth 


i i i t 

111 t 


have increased their benefits, as, for example, the British Steel 
Smelters' Association and the Workers' Union. The London Society 
of Compositors, even though it is not cordial to this government 
activity, considers this grant an aid to their funds. 

Achievements in the prevention of unemployment, through the 
pressure of insurance contributions, have not been to the fore in 
years of exceptional prosperity. The possible future effect of the 
preventive measures, such as the refund to employers for regular 
workmen, the higher rate for casual labor, and the remission of the 
employers' and workers' contributions when short time is worked 
systematically as a substitute for reduction of working force during 
a time of trade depression, cannot be foretold upon the basis of 
four years of feverish industrial activity when the absence of pres- 
sure may have accounted for the belief of employers that the induce- 
ments offered were too slight to have any effect. 

The most significant testimony of the success of the new method of 
dealing with unemployment as an industrial problem is the extension 
of the principle of insurance to meet some of the war-unemployment 
problems — the unemployment in the early days of the war, that 
occurring when soldiers are discharged from the front, and that due to 
the cessation of war orders. It is a method which has commended 
itself alike to the government official, to the general public, and to 
the workingman, who prefers this provision for unemployment on a 
business basis to the humiliating and pauperizing system of poor-law 
and charitable relief. 

[On December 23, 1919, an unemployment insurance bill esti- 
mated to embrace 11,750,000 persons was introduced in the British 
Parliament. This bill would repeal existing legislation and would 
build up a more extensive plan along the lines adopted in the legis- 
lation here described. It is proposed that the rate of benefit be 
increased to 155. per week in the case of men and 1 2 s. per week in 
the case of women. The contributions in the case of men will be 
at the rate of 3^/. per week from both men workers and their 
employers and in the case of women 2^rf. per week from workers 
and employers each. — Ed.] 

Olga S. Halsey 

American Association for Labor Legislation 




■jV/TY AFFILIATION with the International Typographical Union 
-l^Vl began in 1887, and one of my earliest recollections concerns 
the troubles attendant upon the administration of the Union's sick- 
benefit fund, which was finally abolished because, as I can see now, 
the methods of administration employed were not correct. There was 
lack of precedent and experience on which to base sick-benefit laws, 
and the abuses resulting because the funds were not properly guarded 
caused early death to a valuable feature of union policy. 

For years, both as member and officer, I was opposed to trade- 
union-sick, out-of-work, and other relief measures, holding that 
they were outside the trade-union field, which should be restricted 
to the regulation of hours, wages, and working conditions. How 
far the leaven of progress has worked in my case may be gauged 
by the relief laws now on the books of the International Typo- 
graphical Union, of which I was the executive officer for thirteen 
years ; and nearly all of these features were added during my in- 
cumbency as president. I will refer to them specifically further on. 
As I show in this paper, the officials of the great trade-unions 
now recognize the value of benefit features as builders of unions, as 
conservators of the membership of these unions, entirely aside from 
their assistance to the members as safeguards against financial loss 
during physical adversity. 

One of the most direct benefits which a trade-unionist derives 
from membership in his organization is his participation in the 
various forms of insurance which are open to him by virtue of such 
membership. In fact, some of the first trade societies in this coun- 
try were organized primarily as friendly and benevolent societies. 
During the latter part of the eighteenth century and the first quarter 
of the nineteenth the modern conceptions of wage class and wage 

^From American Labor Legislation Review, Vol. IV (1914), pp. 82-91. 


1^ !"' 



earner were unknown, because there had not yet developed a dis- 
tinctive group of workmen dependent upon wages alone for their 
livelihood. Capital had not yet learned its ability to control and 
direct industry. The master workman of that period was at once 
workman, employer, and merchant capitalist. He owned the few 
necessary tools, purchased the raw material, hired the necessary 
help, if any, to aid him in preparing his product for market, and 
retailed his wares to his customers. Sometimes he worked on orders. 
In either case he dealt only with the producer of raw material and 
with the consumer in price determinations and with his helpers or 
journeymen in wage determinations. Since it was the expectation of 
every journeyman some day to become a master workman, and since 
the functions of master and journeyman were at times interchange- 
able, there was a very real identity of interest between master and 
man. Instead of organizations to fix wage scales, combinations to 
fix prices were more pertinent. These were not uncommon. But 
more often friendly and benevolent societies, including in their mem- 
bership both masters and journeymen, were developed as mutual in- 
surance companies. All of these were purely local in their jurisdiction, 
and nationalization was not even considered. 

The half century beginning in the thirties witnessed revolution- 
ary changes in American industrial life. The merchant capitalist, 
and a little later the merchant jobber, appeared to exercise the 
functions of middleman between the producer of raw material and 
the master workman on the one hand and the master workman and 
the consumer on the other. This made of the master workman a 
mere contractor. By playing one such contractor against another 
in receiving bids for work, the merchant capitalist was able to re- 
duce the prices which he paid. The contractor, in turn, in order to 
keep in the race for commissions, shaved the wages of his journey- 
men. This forced the question of wages ahead of all other consider- 
ations in trade organizations and relegated the fraternal and insurance 
features of the earlier friendly societies to a minor position in their 


The masters retained their membership in these new societies 
until, in the further development of the capitalistic function, they 
lost their identity as tool and machinery owners and contractors and 
became instead mere superintendents. By this time the trade 



societies had begun to assume many of the earmarks of modern trade- 
unions, and the masters either withdrew or were forced to resign 
from membership. During this period many of the benevolent so- 
cieties relinquished their insurance benefits and reorganized as trade- 
unions ; others retained their benefits and added restrictive measures 
for the government of their members. Although the era of national- 
ization of trade-unions began at this time, the insurance features 
which were retained from the earlier societies were still adminis- 
tered by local unions. In fact, the leaders of the national movement 
at first discouraged benefits, on the ground that the development of 
such activities would hinder the enforcement of trade regulations. 

In the present period of our industrial life, beginning with the 
last quarter of the nineteenth century, changes have been largely 
of degree rather than of kind. The capitalist has extended his ac- 
tivities and with them his power to direct and control the currents 
of industry. The workman has become more wage conscious and 
has banded with his fellows into strong national unions in an 
effort to establish and maintain standards of wages and working 
conditions. With this emergence of a group of workmen, separate 
and distinct from all other classes in their primary efforts to earn 
a living, have appeared problems to which the wage-earners as a 
class, and more especially as members of a particular union, have 
directed their attention. 

With the return of prosperity following the close of the Civil 
War, this new element in the industrial population— the trade- 
unionists — sought for means by which they could insure themselves 
a place of increasing importance in the social scheme. Savings banks 
grew apace and mutual insurance societies became the order of the 
day. Of the enormous flood of immigrants, many had had experience 
in friendly societies in England. These, together with those Ameri- 
can trade-unionists who still retained their faith in the benefit 
systems of the earlier trade societies, succeeded in interesting large 
nupibers of wage-earners in the institution of mutual insurance 
within their own organizations. They were aided in their efforts 
by the public opinion of the time, which looked to the trade-unions 
for the solution of the problems which faced the wage-earners. 

Gradually the earlier opposition of the national trade-union lead- 
ers to benefit systems was either broken down or was overridden, 





SO that by 1880 the national leaders were beginning to find reasons 
why benefit clauses should be incorporated in, rather than excluded 
from, their constitutions. It was argued that beneficiary features, 
whether or not they attracted members to the union, undoubtedly 
helped to retain them during a period when they might otherwise 
withdraw from membership. And since one of the big problems 
which every trade-union must face is the prevention of declinations 
in membership during industrial disturbances, this new theory of 
benefits was not without its effects. 

The Granite Cutters' Union was the first national union to adopt 
a system of national sick benefits. This was introduced in 1877 and 
was made voluntary in its operation. The plan was not successful, 
and the sickness-insurance association was dissolved in 1888. The 
first national union to inaugurate a compulsory sick benefit was the 
Cigar Makers' Union, in 1880. Its success was immediate and its 
popularity grew rapidly. The German-American Typographia pro- 
vided in its first national constitution, adopted in 1873, for the pay- 
ment of sick benefits by the subordinate unions. This system proved 
unsatisfactory, and in 1884 the national sick benefit was adopted. 
Other prominent unions which have since adopted national sick 
benefits are: Barbers, 1893; Iron Molders, 1896; Tobacco Work- 
ers, 1896 ; Piano and Organ Workers, 1896 ; Pattern Makers, 1898 ; 
Leather Workers on Horse Goods, 1898 ; Boot and Shoe Workers, 
1899 ; Garment Workers, 1900 ; Plumbers, 1903. Other national 
unions which have given much attention to the subject include the 
Typographical Union, the Brotherhood of Carpenters and Joiners, 
the Painters, the Wood Workers, and the IMachinists. 

The International Typographical Union manifested but little in- 
terest in the establishment of a sick benefit prior to 1892. Since 
that time the subject has been discussed at several national conven- 
tions and has even received the indorsement of international officers 
of the Union, but the proposal has been defeated in convention. 
The Union Printers' Home, however, cares not only for aged mem- 
bers but for many afflicted with diseases of the respiratory organs* 
Members who are afflicted with disease that makes their admission 
to the home inadvisable are, if otherwise eligible, placed on the 
union's pension roll. A pension of S5 per week is paid to all in- 
capacitated members sixty years of age or over, and there are also 


mortuary benefits ranging from $75 to S400 according to length of 

It is not possible to give a significant summary of the extent of 
national trade-union sickness insurance in the United States at the 
present time. Twenty-seven of the unions affiliated with the Ameri- 
can Federation of Labor paid out in national sick benefits during the 
year ending September 30, 1913, a little over $800,000. Of^'this 
amount the Cigar Makers' Union alone paid out $200,000.^ Be- 
cause this union best shows what is possible in national-union sick 
insurance, a brief statement of the history of this feature of the 
Union's policy is pertinent here. Beginning in 1881 with a total 
sick-benefit payment of less than $4000, the annual amount has 
steadily increased until in 19 11 it for the first time reached $200,000. 
The per capita cost of this sick benefit has likewise increased from 
27 cents in 1881 to $3.73 in 1905, since which time it has remained 
nearly constant, although during the last two years it has been 
slightly more than $4. Every member of the Union is entitled to 
participate in sick benefits. Members leaving the trade may ob- 
tain a trade "retiring card" which entitles them to sick benefits as 
long as they maintain the payment of a certain proportion of the 
regular dues. Sick members are entitled to receive $s per week for 
a period not to exceed thirteen weeks in any one year ; no payments 
are made for sickness of less than seven days' duration. A mem- 
bership of one year is required before the member is entitled to 
the sick benefit. Sickness caused by intemperance, debauchery, or 
immoral conduct is not accepted as a cause for claiming benefits! 

By far the greater proportion of trade-unionists who are pro- 
tected by sickness insurance receive support from local rather than 
from international unions. Of the 530 local unions reported in the 

iThe exact figures are: Total amount, all unions, $816,336.41; Cigar Makers 
*204,77s.6i ; Molders, $iS9,434 ; Western Federation of Miners, $96,06644- 
Boot and Shoe Workers, $74,790.81 ; Hotel and Restaurant Employees $58 - 
911.06; Plumbers, $47,000; Barbers, $46,185.91; Bakers, $33,870; Tailors, 
$22,009.80; Retail Clerks, $14,225; Iron and Steel Workers, $10,515; A. F. of L 
locals, $8813.06; Photo Engravers, $7865.51; Patternmakers, $7053.04; Painters' 
$6400; Tobacco Workers, $5917 ; Cloth Hat and Cap Makers, $3859; White 
Rats Actors, $2156.67; Stonecutters, $2000; Diamond Workers, $1600 • Steel 
and Copper Plate Printers, $1280; Wire Weavers, $350.50; Travelers' Goods and 
Leather Novelty Workers, $300; Foundry Employees, $245; Shingle Weavers 
$69 ; Pocket Knife Blade Grinders, $54. 






volume on " Workmen's Insurance and Benefit Funds in the United 
States," prepared in 1908 under the direction of the United States 
Commissioner of Labor, 308 pay sick benefits. These vary from 
Si to Sic per week, while S5 per week is the amount most often 
paid. The maximum periods for which sick benefits are provided 
vary from five weeks in one year to unlimited time, with thirteen 
weeks in any one year as the most common. Generally the period 
of illness must continue for seven days or more at any one time 
before benefits may be claimed. The number of days at the be- 
ginning of the illness for which benefits are not paid varies from 
none to twenty-one, while seven is the most common. The length 
of membership required in order to establish a right to claim bene- 
fits for sickness varies from no time at all to one year, with six 
months the most common. Most unions require the presentation 
of physicians' certificates and the investigation of sick-benefit claims 
by union sick committees. 

While the International Typographical Union does not maintain 
a national sick-benefit fund, its local branches have perfected three 
separate forms of insurance against illness. These may be called 
the local-union sick-benefit insurance, the union-auxiliary mutual- 
aid insurance, and the union chapel or shop insurance. The first 
of these — the union sick-benefit insurance — is typified in the con- 
stitution of St. Louis Typographical Union No. 8. All members 
of this union who have been in continuous good standing for six 
months and who are incapacitated for work for a period of two 
weeks or longer are entitled to receive from the Union a weekly 
benefit of $5 for a period not to exceed twelve weeks in any one 
year. If the illness is of such a nature as to require hospital ac- 
commodations, the Union stands ready to pay hospital charges dot 
to exceed S7 per week in lieu of the weekly sick benefit. Neither 
sick nor hospital benefit is extended to cases of alcoholisn-i' or to 
cases of chronic, contagious, or venereal disease. 

The second form of sickness insurance among printers' — the 
union-auxiliary mutual-aid insurance — is represented in the Chicago 
Union Printers' Mutual Aid Society. This society is a mutual in- 
surance association organized solely for the purpose of giving tinan- 
cial aid and assistance to its members in time of sickness or acci dent. 
No person is eligible to membership who is not already a member in 


good standing of Chicago Typographical Union No. 16. Members 
when sick are entitled to receive S 10 per week for a period not to 
exceed twenty-six weeks in any one year, provided their illness lasts 
for two weeks or longer. Membership in this society is voluntary 
and is not required of members of Typographical Union No. 16. 
Nevertheless, the Union encourages its members to join the society, 
and to effect this end it has abolished all union relief in case of 
sickness, except to those members whose applications for member- 
ship in the society have been rejected on account of their inability 
to pass the required medical examination. In such cases the union 
may grant relief by extending a loan of not more than $25 in 
ordinary cases to sick and destitute members. 

For an example of the third form of printers' sick benefits— the 
union chapel or shop insurance — we may refer to the Composing- 
room Relief Association of the New York World. Perhaps it is not 
quite accurate to call this association a union insurance society, 
since membership in a union is not required of all members in the 
association. Yet we call this a form of union chapel or shop in- 
surance, because, except for this omission, it typifies that group of 
chapel and shop insurance organizations which do require of appli- 
cants for membership the presentation of a union card. This asso- 
ciation was organized originally for the benefit of compositors alone, 
but it now includes among its 500 members editors, writers, employees 
of the business and circulation departments, stereotypers, press- 
men, and mailers as well. Upon the payment of weekly dues of 
fifty cents, its members when sick are entitled to receive $10 per 
week for a period not to exceed twenty-six weeks in any one year. 
Under certain conditions the dues may be increased in individual 
cases to Si or Si. 50 per week and the benefits to S20 or S30 per 
week accordingly. 

Wheth.-r administered by the international union or by the subor- 
dinate locals, the sick benefit is intended to provide insurance against 
illness which temporarily incapacitates the wage-earner for his regu- 
lar work. Members are usually debarred from such benefits in 
case of illness due to "intemperance, debauchery, or other immoral 
conduct"; and in some cases illness caused by "the member's 
own act" may not be used as a basis for benefit claims. In no case 
is the sick benefit intended to constitute a pension for members 




suffering from chronic disability. The time limit during which a 
member may receive insurance in any one year prevents this. Some 
of the unions, notably the Iron Molders and the Boot and Shoe 
Workers, go even further and provide for retiring such members 
from the privilege of sick benefits in case they attempt to draw 
the maximum amount year after year. 

The limelight of publicity has been turned upon industrial acci- 
dents and occupational diseases. As a result, individual students of 
social problems, philanthropic organizations, and state and national 
departments of labor are beginning to learn about the hazards of 
industrial life. The more knowledge we obtain, the more eager we 
are to embody it into measures which will prevent such accidents, 
do away with the necessity for exposure to occupational diseases, 
and compensate the sufferer and his family. Our former insistence 
upon the competence of voluntary action to deal with accidents and 
diseases in which the factor of the inherent risks of the industry is 
so great is being displaced by a belief in the necessity for com- 
pulsory insurance administered by governmental authority. Fol- 
lowing closely upon the heels of the demand for compensation 
legislation is the cry for old-age pensions, mothers' pensions, and a 
host of other reforms which abroad have already become realities, 
but which in America are just being divested of the stigma of 
socialism and paternalism. 

In some of these proposed reforms it is not very easy to trace a 
causal relationship between the condition which demands a remedy 
and society's responsibility for that condition. Still more difficult 
is it to measure social responsibility in considering what we are 
accustomed to call the private misfortune of ordinary illness. But 
the fact remains that we are forced to recognize the presence of 
a vast deal of sickness among wage-earners, against which no pro- 
vision has been made and for which relief is necessary. Some day 
we may be asked to provide compulsory state or national insurance 
against this also. At present we must look to other agencie... The 
trade-union, and especially the international union, is peculiarly 
fitted to administer sickness insurance. For the most part, each local 
union is made up of people of the same nationality, of similar habits 
of life, resembling each other in physical make-up, and subject 
to similar risks and exposures. They know one another personally 




and are able to detect imposture in the rare cases where this is 
attempted. Then, too, sickness insurance, when conducted on the 
local mutual plan, requires neither large reserves nor a great invest- 
ment of funds. When conducted by an international union, there is, 
of course, need for a reserve fund, and there is also greater care 
and more approved business methods in the disbursement of money. 
Therefore, whatever may be our ideas of the activity of govern- 
mental agencies in other forms of industrial insurance, we must 
admit that for the present at least we are not ready for the state to 
insure our wage-earners against sickness. We must also recognize 
that at present wage-earners as a class cannot, or at least do not, 
make individual provision for temporary disability due to illness. 
What is not done individually must be done collectively if at all. 
It is for these reasons that we believe in trade-union sickness in- 
surance and that we are ready to offer it encouragement. 

Judging from some of the opinions expressed here today, there 
may be criticism of trade-union sick-insurance methods on the 
ground that all of the funds are contributed by employees, the em- 
ployer not bearing a share of the expenditures. From a somewhat 
extended experience it is my conviction that in a well-organized 
industry the employer does contribute, — indirectly, it is true, but 
actually none the less, — for the cost to the union member is later 
used by the union as an argument for an increased wage scale, and 
is so accepted by employers, in the printing industry at least. All 
the benevolent features of the International Typographical Union, 
including the pension fund from which iioo members are now 
drawing pensions, the mortuary fund, and the Union Printers' Home, 
are supported by the members. 

It was said here today that compulsory insurance is never en- 
thusiastically supported. Thousands of our members voted against 
the mortuary and pension laws ; but the majority vote was for these 
laws, and they are compulsory. They have been in effect for several 
years, and if they were resubmitted now, I am satisfied that there 
would be a comparatively small vote against them. 

As far as a joint fund for such benefits is concerned, I am satis- 
fied that even with a board of directors of seven twelfths for the 
employees and five twelfths for the employer, the latter would dic- 
tate the policies and control the fund. Naturally the wage-earners 









look askance at these company-instituted and company-controlled 
funds, as they give the impression that they are instituted in order 
that the worker may be more firmly bound to the industry and less 
liable to form industrial organizations for the regulation of hours, 
wages, and working conditions. I am opposed to any scheme which 
takes out of the pay envelope the "contribution" of the employee. 
He should receive his wages in full. 

A strong union, capable of protecting the rights of the individ- 
ual, can successfully conduct sick-insurance features. Unorganized 
workers will find their best protection in state-supervised or state- 
instituted sickness insurance, for they will not then be at the mercy 
of the rapacity or greed or kindness or charity of the employer. 
The state, and not mixed directorates, will see that full and even 
justice is accorded. 

With the general adoption of compensation for industrial acci- 
dents will come reasonably safe factories, for these laws will do 
as much for safety as the inspection service of the state departments 
of labor. Properly guarded machinery will mean a lower insurance 
rale. Following compensation for industrial accidents will come 
compensation for industrial diseases, and this will in turn mean 
reasonably safe factories from a health standpoint. Both will raise 
the standard of living, and a higher standard of living will mean a 
healthier people and less sickness of a general nature. 

Pay to the wage-earners living wages and give them the eight- 
hour day, and they will spend their money wisely and provide their 
own health insurance. There will then be no occasion for worry 
on the part of those employers who may have the idea that they 
are the natural guardians and protectors of their workpeople, and 
who seek to mold laws accordingly. 

James M. Lynch 

Industrial Commission of New York * 



THE campaign against tuberculosis has given to the American 
people a new idea of the doctor. We had thought of him as a 
last resort after we had doctored ourselves and tried out the patent 
medicines and practiced faith. The antituberculosis movement has 
begun to show us that the doctor should be first. We know that we 
need him in sickness. We begin to want him also to prevent sickness. 

Likewise, the workingmen's accident-compensation laws have given 
us a new idea regarding insurance. We got our idea of insurance from 
life insurance. Death is inevitable, and the purpose of life insurance 
is the philanthropic purpose of paying uncertain but unavoidable 
expenses when dead. So we thought that accidents were inevitable, 
and that the purpose of accident insurance was the philanthropic 
purpose of relief to injured workmen and to the families of killed 
workmen. But the compensation laws have shown us that accidents 
are largely preventable and that employers can prevent them. So 
we have learned to think that the first purpose of accident insurance 
is the business purpose of making money by preventing accidents. 

These compensation laws have a double mechanism. They are 
an employer's tax on accidents and a workman's insurance against 
unprevented accidents. Employers can escape the tax, and thus cut 
down the cost of compensation, by preventing accidents. There are 
records of employers who have reduced accidents 90 per cent. Some 
of them affirm that the money put into accident prevention is the 
most profitable part of their business. 

So a new profession has sprung up. Or, rather, those persons who 
formerly practiced the profession of claim agent, for the purpose of 
protecting their employers against lawsuits, have become safety ex- 
pertSy and they now protect their employers against the tax on 
accidents, by preventing the accidents. 

^ By J. R. Commons. Address delivered at Fifteenth Annual Meeting, Na- 
tional Tuberculosis Association, June, 1919. 






I sometimes think it is more difficult to persuade the average doctor 
to become a health expert and to prevent sickness than it was to 
convert the claim agent into a safety expert to prevent accidents. 
As a matter of fact, the claim agent fought the process of conversion 
about as stiffly as he could, and it was only the overwhelming power 
of a tax on accidents that converted him. Now he is proud of his 
new profession, and his employer is proud of him. I occasionally 
hear of employers who say what fools they were in fighting accident 
compensation. The new thing certainly did look bad for them at the 
time. But they are escaping the tax on accidents by devoting the 
same kind of business ability to preventing accidents that they had 
devoted to manufacturing and selling their product.^ 

It is much the same with the proposed business tax on sickness. 
We read of the probable enormous cost to industry of compulsory 
health insurance. It looks like bankruptcy. I am willing to accept 
the figures. They are presumably based on the existing amount of 
sickness, although the same insurance experts turn around and say 
there is not much sickness anyhow. 

The explanation is rather simple. They fail to distinguish philan- 
thropy from business. If this large amount of sickness is unprevent- 
able, then the cost of relief to the sick in a proper humanitarian way 
will doubtless be very great. But if it is largely preventable, then 
the proper American way is to offer to our business men a chance to 
make a big profit by preventing it. 

I believe our business men have more business ability than those 
of other countries. They are ingenious, alert, they take chances, and 
they know how to employ experts to work out the technical details. 
In these respects they are also quite superior to our politicians and 
other government officials. It is a curious fact that our insurance 
experts, who try to prove to us that the purpose of insurance is not 
prevention but relief, wish to turn over the prevention of sickness in 
industry not to our business men who control the industry but to 
our politicians. They give us attractive programs of public-health 
administration, of great and efficient federal, state, and municipal 
health departments, of public-health nurses, of city and county san- 
atoria, hospitals, and clinics, of state health inspectors and state and 
municipal factory inspectors going into the homes and factories and 

1 See above, p. 9. 




vigorously enforcing a long list of beneficent sanitary laws and health 
laws and factory-inspection laws. 

Well, we had a good deal of experience along this line in enforcing 
the factory-inspection laws which require safeguards on machinery 
as protection against accidents. The factory inspector's job was a 
very disagreeable and even heroic job. Occasionally he was kicked 
out by an employer, or, if not kicked out of the factory, was inscru- 
tably lifted out of his job. He had to collect evidence of violations 
of law, and this evidence had to be sufficient to prove to a judge and 
jury that the employer was a petty criminal, and the law gave to the 
criminal the benefit of every doubt. Thus the factory inspector was 
strung along the rocky career of a detective, sneaking in where he 
was not wanted, or hustled past the dangerous machinery, and it is 
no wonder that many of them became blind. Even if they did see 
things, very little accident prevention came out of it. The successful 
factory inspector was the one who held his job, not the one who 
prevented accidents. 

All of this was greatly changed when workmen's compensation, 
with its tax on accidents, came in. Now the employer is not treated 
like a criminal ; he is a taxpayer. But — unlike some other taxes — 
he is allowed to make money by evading this tax. So he eagerly 
invites the inspector to come in and show him how to escape the tax 
by preventing the accidents. 

But he finds that the old-time political inspector cannot see. What 
the employer wants is not a detective anyhow, he wants a safety 
expert. So he hires his own expert, starts a nation-wide "safety 
first" campaign, cultivates the "safety spirit" in his employees and 
in the public. 

Then, behold, the factory inspector also begins to be transformed. 
It is remarkable what influence business men have on government at 
the points where they can make a profit or avoid a loss. In the midst 
of even the most corrupt municipal politics they nearly always suc- 
ceed in having an efficient fire department. I do not know of any 
workingmen or experts in public or private employment who have 
a greater pride in their job, or greater efficiency, than the city fire- 
men and fire chiefs. It is because business makes money by them. 
And so with the factory inspectors. When business men want factory 
inspectors to be made exempt from politics, because they want them to 





help keep down the accident tax on business, then the factory inspec- 
tor becomes a new man. Government itself becomes better, for 
government-in-action, at this point, is the factory-inspector-in-action. 

Consequently I offer no objection to the health program of the 
insurance experts who would turn over sickness prevention to the 
politicians. I see a great opportunity to improve politics, to enlarge 
and improve our health departments, and thus to prevent sickness. 
But I do not see it effective and on a sufficiently large scale until 
sickness prevention is made a source of financial profit to business 

This is what is intended in the program of health insurance. There 
is, of course, also a philanthropic purpose in that program, but that 
philanthropic purpose is really secondary. The main purpose is the 
business purpose of making sickness prevention profitable. There 
does not seem to be any other way of reaching all of our business 
men, as well as workingmen. Many of our big corporations have 
begun to take hold of sickness prevention. They look on it as a 
business proposition and they resent the name sometimes given to it 
of "welfare work." The difficulty, however, is that it is not universal 
and they do not put enough business ability into it. One reason is 
that it is too easy to shift the entire cost of sickness over to the 
workingman and his family. The thing works automatically. When 
the workman gets sick he just lays off on his own initiative and pays 
his own bills if he can, and somebody else takes his place. 

But health insurance is a follow-up proposition. The employer 
cannot shift the entire cost over to the workmen, but must share the 
cost of doctors and nurses and hospitals and medicines and must 
continue to pay a part of the worker's wages even when absent from 
work. It is a sickness tax on industry, coupled with an insurance 
scheme in order to spread the tax over the industry and over a period 
of time. But since the industry is not solely responsible for sickness, 
the workman also is required to contribute to the insurance fund, and 
a part of the tax is thereby spread out over his wages. 

If it were not that several large corporations have already volun- 
tarily adopted this plan of health insurance and set the example, we 
could not know certainly how it would work. But we do know, from 
their example, that it prevents sickness. I know such a corporation 
that has reduced the number of days lost on account of sickness one 


half, and the resultant increase in wages and the increase in efficiency 
of workers has been much greater than the total cost of the insurance. 

Another corporation figured that they stood to lose $600 on the 
average on account of their workmen who came down with tuber- 
culosis, because they had undertaken to provide sanatoria for the 
cure of their tuberculous workmen and cash benefits for their families 
while getting cured. They could save, on the average, $600 if they 
could detect incipient tuberculosis before anybody suspected it. They 
had voluntarily taxed themselves for the cure of tuberculosis and 
then saved a large part of the tax by preventing it. 

Another corporation, which furnishes physicians and nurses free 
to its employees, finds that where six years ago 75 per cent of their 
time was spent in airing sickness and only 2 5 per cent in preventing 
it, now they spend 75 per cent of their time in preventing sickness, 
and only 25 per cent is needed for the cure of it. This company ap- 
propriates $60,000 a year to its medical department, and out of this 
budget has saved enough money in one year to procure and equip 
what they call a "Rest Home," where employees below par may go 
and recuperate at the expense of the company. 

Other examples like these might be given. They are convincing 
and conclusive. When business men, for the sake of increasing the 
efficiency of their employees, voluntarily tax themselves for the cure 
of sickness, they end by preventing it. If other business men, not as 
progressive, are taxed by law for the cure of sickness, then business 
ability will find abundant means of preventing sickness. 

Here is the big inducement for a public-health program. Not many 
corporations are big enough, not farseeing enough, to tax themselves 
voluntarily, as these have done, for the support of hospitals and 
sanatoria, clinics, doctors, and nurses. The overwhelming majority 
of business men must depend on the public-health authorities for this 
assistance. And they will not seriously look for this assistance until 
they are taxed by law for the sickness that they have not prevented. 

The other method of starting a health program is to start it before 
there is a business demand for it. Mr. Hoffman,^ for example, says 
that the "American Association for Labor Legislation could not 
better serve the interests of American labor than by exerting itself 

^ See F. L. Hoffman, Facts and Fallacies of Compulsory Health Insurance, 


1 ! 



effectively in behalf of the enactment and enforcement of legislation 
providing more efficient governmental supervision and control of 
the dusty and other trades and occupations predisposing to an ex- 
cessive morbidity and mortality from pulmonary tuberculosis." 

But what does the "enactment and enforcement" of such legis- 
lation signify? It signifies increasing the number of petty criminals 
among business men. It is rather odd that a person who is so greatly 
disturbed about what he calls "paternalism" and " state socialism" 
and "class legislation" and the "menace of coercive laws" should 
find himself calling for laws to increase the criminality of business 
men. I suppose it is not class legislation to make petty criminals 
out of employers for the sake of their employees, but it is class 
legislation to tax them on behalf of their employees. I suppose it is 
not "paternalism" to punish your child for doing evil, but it is 
paternalism to reward him for doing good. It seems to be not so 
much "coercive laws" in general that our insurance experts are 
against as coercive laws that do not make criminals. 

We must have legislation in one way or another if we get anywhere 
in a health program, and the only question is what kind of legislation 
it shall be. If we go after repressive legislation which increases 
criminality, we run great risks of breaking down our health depart- 
ments through practical politics in the hopeless task of detecting and 
prosecuting criminals ; but if we go after cooperative legislation 
that offers the inducement of profit to business men if they will 
take a hand themselves in preventing sickness, we shall strengthen 
the demand for efficient health departments free from politics. 
Instead of starting a public-health program in defiance of business 
instincts, we start it by building up a business demand for it. 

That America stands in need of such a program we realize now as 
never before. We have had our first national survey of the people's 
health. For the first time the medical profession has been organ- 
ized on a national scale for the detection of disease. Thousands of 
our young men, at the prime of life, when the nation needed them, 
have been rejected and returned to their homes. Every local com- 
munity in the nation has been wakened up to the previously un- 
discovered tuberculosis and physical and mental defects in its midst. 
Even our most efficient health departments did not know anything 
about three fourths or even nine tenths of the tuberculosis in their 



jurisdiction. We know now, as never before, how much it means 
to the nation to start at the very beginning, before people suspect 
that anything is wrong with themselves. We know that if thousands 
were rejected at the draft, there must be additional thousands and 
hundreds of thousands defective in like manner. The draft reached 
10,000,000. But there are 100,000,000 of us. 

And there we leave it. These boys of ours return to their homes, 
and nothing is done about it. These hundreds of thousands need a 
similar medical examination, and there are no doctors to examine 
them. They are no longer immediately needed to defend the nation 
in war, but they are needed in agriculture, manufactures, mining, and 
every business and profession where they can help to make the 
nation prosperous and happy in time of peace. Health is our first 
and greatest asset ; sickness and poor physique our greatest liability. 
We have abundant natural resources. We have a stimulating, even 
overstimulating, climate. We have a more intense competitive busi- 
ness and industry than any other nation. We need stronger men 
and women to keep up the pace than any other nation. Our wealth 
is not in our resources and climate, but in our oncoming men and 
women. The doctor is our greatest producer of wealth. The rest of 
us can do nothing if the doctor falls down. Schools and education 
are fruitless without health. Industry carries an unseen but costly ex- 
pense of inefficiency and absenteeism on account of ill health and poor 
physique. We, as a nation, have begun to see the futility of education 
and industry if we do not have health and physique to build upon. 

Shall the doctor rise to this demand and do his part ? He may 
cling to the old idea that his is the art of curing people of sickness and 
driving out the evil that previously got into them. That is im- 
portant enough, we do not need to be told. But will he really also get 
a living sense of what he might do and how he must do it if he would 
make the modern scientific preventive medicine available for every- 
body? He can try to bail out the river as it flows through the 
country, but can he go back to the 100,000,000 unseen sources of 
the river of sickness ? 

I do not see that the profession as a whole is in the frame of mind 
to do it. They will agree with you that it ought to be done, and, 
more than any other profession or business, the medical profession 
has a high sense of public responsibility. Other professions look 





i I 


complacently on an increase in the public demand for their services. 
Lawyers, on the whole, are not eager to cut down the amount of 
litigation and legal business in the country. Doctors, on the other 
hand, support all measures tending to improve the public health 
and cut down the demand for doctors. 

But, on the whole, they seem to think that the actual work of im- 
proving the public health belongs to the public-health departments 
and not to the practicing physicians. For that actual work re- 
quires much more cooperation on their part with the health depart- 
ments than they seem to be willing to undertake. They are glad 
to educate the public, and to warn the public, and to approve public- 
health resolutions, but to organize themselves as a profession and to 
do what is necessary in order to examine 100,000,000 people and 
then keep them continuously in good health does not seem to appeal 
to them. 

Only in one branch of the medical profession does there seem to 
be a truly live appreciation of what an outsider would think is pre- 
eminently needed. In that remarkable Framingham demonstration 
the tuberculosis specialists have started out to examine and follow up 
an entire community in advance of individual complaints. They do 
it through the cooperation of the practicing physicians, and in order 
to accomplish this they work through the organized medical society 
and through the public-health department of the city. It means 
the organization of the community itself, the organization of the 
nurses, and the daily cooperation of the people, the doctors, the 
nurses, the specialists, and the public-health department in a great 
systematic program of early detection and sickness prevention. 

This Framingham demonstration seems to me a far more impres- 
sive lesson than any campaign ever undertaken by the Tuberculosis 
Association for the construction of sanatoria and the cure of ad- 
vanced cases. It was natural that the early tendency of tuberculosis 
specialists, like other specialists, was directed towards hospitals, 
sanatoria, and treatment of advanced cases. What is wanted now is 
a Framingham demonstration in every state of the Union— not fewer 
sanatoria but more clinics. The people of this country need to 
learn how to go about it in order to cooperate with the doctors. 
We never shall learn unless the physicians show us. We know 
what we want, but we do not know how to do it. A Framingham 



demonstration in every state would show us how, and would waken 
up the entire medical profession to the methods and possibilities of 
sickness prevention. 

Almost more than any other human ailment is tuberculosis a prob- 
lem of early examination and prevention. If nearly all of us have 
been carrying around the germ in little self-made pockets without 
knowing it, what we want is not merely to keep away from the germ 
but also to have somebody find out for us as soon as possible 
whether the pockets are holding out and to tell us what to do to keep 
them from breaking loose. Evidently in this search for tuberculosis 
almost every other unseen human ailment can be uncovered. There 
are other lurking germs, and, most of all, there is the everyday life 
in the home, in the factory and shop, there is the fatigue, the strain, 
the food, the shelter, that determine whether or not the body is re- 
sisting and overcoming its subtle enemies. That which is done to 
discover and head off tuberculosis may well discover and head off 
many of the other ailments and poor physique. The tuberculosis 
specialist is the least specialized of all medical specialists, for he 
must take into account all of the social and industrial conditions as 
well as the individual conditions that predispose to disease. In doing 
so he must have the cooperation of the entire profession, of the entire 
community, and of the health departments. 

The great question in a health program is how to get this coopera- 
tion universally. What it amounts to is practically a revised view 
of the ethics of the medical profession. It seems that, in our great 
cities at least, those who get the best medical attention are the very 
rich and the very poor. For these extreme classes medical advice 
and care are practically free. The very rich do not mind the expense, 
and the very poor are not ashamed if somebody else pays their bills. 
But the extreme rich and poor are scarcely 5 or 10 per cent of the 
total population. The idea of extending free medicine to the other 
90 per cent of the population seems revolting to many physicians. 

At the University of Wisconsin we have free medical supervision 
for 5000 students. The state is taxed for health supervision of the 
students exactly as it is taxed for their education. As a result, the 
students consult the physicians on an average probably four or five 
times as often during the year as they would if they had to pay at 
each consultation, besides getting the thorough physical examination 


at the beginning of the year. The result has been a great reduction 
in sickness, a reduction in absenteeism from classes, and greatly 
increased student efficiency. The loss of time due to bed illness 
has been reduced 40 to 60 per cent, due to the early treatment of 
preventable conditions. The frequent consultations have reduced 
serious illness and its complications at least 50 per cent. During the 
eight years of this medical supervision the University death rate 
has been reduced to only one fourth of the general expectant rate, 
exclusive of tuberculosis, at the same age period, and even the 
death rate from the recent "flu" epidemic was believed to be only 
one fourth of the general death rate attributable to that cause. 

Why should not something like this arrangement be extended to 
the entire population of the state and the nation ? It does for 5000 
of the great middle class by taxation what the very rich and the very 
poor have been getting in the great cities substantially free of cost 
to themselves. 

The principal reason against extending it to the nation seems to be 
the opposition of doctors. The idea that people generally should 
consult them without paying for each consultation seems unusual to 
them. Consequently we have that ethics of the profession which 
permits heavy fees charged to wealthy patients in order to make up 
for the free service given to indigent patients. Even if there are no 
wealthy patients in the neighborhood, the doctor expects to render 
a considerable amount of service free of charge, or, what is the same 
thing, to carry a large account of uncollectable bills, and these 
charges must be met by correspondingly higher fees charged to the 
people who do pay their bills. It amounts to a tax on the wealthy 
and on the great middle class in order to give free service to a pauper- 
ized class or a class that is not ashamed to dodge its doctor's bills. 

As a result, this great middle class of farmers, wage-earners, and 
people with moderate incomes, who will not accept free service, do 
not consult the doctors and pay the fees until they are compelled by 
sickness. They hold off, and doctor themselves, and buy patent 
medicines, until it is too late. If consultations were free, they doubt- 
less would consult the doctors, as our students do, many times as 
often as they now do. 

This is what I call prevention of sickness, and this is what health 
insurance means. It means free consultations, and it means payment 



of the doctors, to that extent, out of a fund contributed in advance 
by the people and by the industries of the country. It means free 
consultations and free examinations and diagnoses supported by taxa- 
tion through the medium of insurance funds. It means, instead of 
the physician's being compelled to constitute himself a tax assessor 
and tax collector on the wealthy and the middle class in order to 
furnish the poor with free service after they are sick, that the legis- 
lature shall create its own system of taxation in order that the doctor 
may freely serve all persons long before they get sick. 

One of the principal obstacles, as I have just said, to the method 
of starting a health program by means of universal health insurance 
is the attitude of many doctors. Doctors have several reasons for 
suspicion. They know something about the contract doctors. They 
see mutual benefit societies let out contracts to the lowest bidder to 
take care of their members in sickness. But these mutual-benefit 
societies have the old idea of insurance as a philanthropic measure 
of relief, not the new idea of insurance as a means of preventing 
sickness. They look on sickness as inevitable and the doctor as a 
palliative. They get this idea largely from the doctors themselves. 
They have not yet fully learned from their doctors of the enormous 
advance that the past thirty years has made possible in preventive 
medicine. Neither have these mutual societies the business ability 
nor business inducement to prevent sickness that the employer has. 
Their purpose is charity, not business. These mutual societies will 
always have a most important part in a universal health program. 
They do one thing that neither the doctor nor the employer can do. 
The very fact that they let out contracts to the lowest bidders indi- 
cates that they try to keep down expenses. They assess themselves, 
and if expenses go up their assessments go up. For this reason they 
are careful to watch their members and to prevent them from feigning 
sickness and getting the benefits fraudulently. In this respect they 
can do what neither employers nor doctors can do without their help, 
and this is a reason why health-insurance programs propose greatly 
to enlarge the field of these mutual societies, and to require their 
members, as well as the employers, to contribute to the insurance 
funds. But their field is largely the care of unprevented sickness. 
Not until the business ability of the community is directed towards 
prevention can we expect that the enormous advances in medical 



science of the past thirty years will be generally utilized. Then 
the doctor who bids on contracts will disappear, much as the old- 
time factory inspector is giving way to the safety expert. 

The other important obstacle to health insurance is the idea, not 
only of insurance experts but also of the public and of physicians 
and surgeons, that the work of the practicing physician is the art of 
healing the sick rather than the art of preventing their sickness. 
Those who are interested in the problem of tuberculosis are the 
pioneers in revising this mistaken view, for they realize, as others 
do not, how little can be accomplished without the complete organi- 
zation of the profession and of the community for the purpose of 
discovery and prevention. It is fortunate that they have had their 
own association and their own funds, independent of the profession in 
general, for it is this that enables them to go ahead in their educa- 
tional campaign of organization, legislation, and prevention, without 
waiting for others. 

The work of the Tuberculosis Association reveals that palliatives 
and halfway measures are inadequate. It reveals to us, most of all, 
the need of a medical profession that shall be in truth the guardian 

of the public health as well as practitioners of the healing art 

a profession so organized that the wonderful developments of medical 
science shall reach every person, for the public health is nothing but 
the protection of each individuaPs health. 

It reveals to us the need of placing this profession on a business 
basis instead of leaving its practitioners to the doubtful expedient 
of financing their calls for charity by taxing it up to the more well- 

The work of the Tuberculosis Association reveals the need of en- 
listing the business ability of the nation in the campaign of preven- 
tion. Industry already pays an unseen tax in the absenteeism and 
inefficiency caused by sickness and poor physique. But not until 
this tax is made visible in terms of money, where it can be actually 
seen entering into the cost of manufacture, will business men gen- 
erally look to the medical profession for assistance in reducing it. 
WTien the vigilance of business men is enlisted in the cause, then 
will the high aims of the new medical profession, which seeks to 
keep the nation healthy as well as cure its sickness, be more nearly 
realized. Medicine will more nearly become public medicine, but 



liberated from politics. Health departments, in every town and rural 
district, instead of trying to do the work of prevention themselves 
unaided, will be the public agencies which furnish to the private 
practitioners the dispensaries, clinics, hospitals, sanatoria, school and 
county nurses, which make it financially possible for the private 
practitioners to add the work of prevention to their work of healing. 
A truly comprehensive health program is not restricted to any one 
thing. It means, of course, the cure of sickness. But it means, also, 
the personal cooperation of every private citizen in sickness preven- 
tion. It means the business enterprise of every capitalist and em- 
ployer of labor. It means sickness insurance. It means increased 
taxation on uriprevented sickness, with ultimately reduced taxation 
on property. It means, most of all, a medical profession able and 
willing to bring to the service of the entire nation the marvelous 
discoveries of the science of preventive medicine. 

John R. Commons 

University of Wisconsin 





\ " 


■.:f , 
"•MLkt IB' 





NUMBER 2. Age fifty-six years, born in America, of American 
parents. Single. Still strong. When he was between twenty and 
twenty-five years of age he wanted to marry, but never had enough 
money to establish a home. He became a "regular" lumberjack. A 
"regular" lumberjack cannot marry, for he cannot take his wife to 
the camp, and it is of no use for her to live in the city. Secondly, 
if a man becomes a "regular" lumberjack, he is not fit for married 
life; he drinks, fights, and leads an immoral life. He does not 
know any trade. While a boy he wanted to learn mechanics, to 
become a worker in a machine shop, but he had no chance for this, 
for his folks were poor and he did not have a sense of how to go 
about learning this desired trade ; his father was not very bright 
either — he could not read and write. He himself had been in a 
public school for his education. 

His father was a farmer, and he started to work on his father's 
farm when ten years of age, to do chores and every kind of farming 
work. His mother died when he was very young. As the farm was 
heavily mortgaged, it was sold ; not much money was left. 

When he was sixteen years of age he went into the lumber woods 
to provide for himself. He worked from fourteen to fifteen hours 
a day. The pay was, at the beginning, $i8 a month and board. 
Laundry was done by the men themselves. Two men slept in a 
bunk; the bunks were in two stories. The bedding was hemlock 
brush, covered with a blanket. In the bunk house there was no 
iron stove, but just a fireplace called "kabuke." The foreman was 
a bad man, always hollering, abusing, ever dissatisfied with his men, 
and turning them out two hours before "they could see wolves." 

iFrom interviews made for the U.S. Industrial Relations Commission, 1914. 


The plates and table utensils were made of wood by the men them- 
selves. The board was very poor; it consisted mostly of salt 
pork and salt beef. There was no ventilation in the bunk houses. 
There was no wooden floor, just the naked earth. Nobody washed 
the blankets ; they were dirty and had vermin. 

He managed to work on this place eight years, in winter and in 
summer. The company then moved to another place, where he 
worked a year more with the same company. He then wanted to try 
other companies, believing that they might be better, but the con- 
ditions were almost the same, perhaps a little better. He worked 
here and there one year. He quit because other fellows told him of 
a place where the conditions were much better. He tried that place, 
but the conditions were just the same. He then migrated to the state 
of Wisconsin, and worked there in various lumber camps two years, 
but the labor conditions in the lumber camps in Wisconsin were worse 
than in Michigan. He wanted to see the camps in Minnesota, and 
migrated there. He worked there five years with two companies. 
In the camp of one the labor conditions were a little better than in 
the lumber camps of Wisconsin, but in the camp of the other the 
conditions were still worse. 

He then wanted to see his folks, father and sister, and came back 
to Michigan, having about S60. After a week with his folks he went 
to work for a lumber jobber, thirteen to fourteen hours a day, S3 5 
a month and board. He paid for the washing of his laundry 80 cents 
a month. Two men slept in one bunk ; the bunks were in two and 
three stories. The bedding consisted of sacks filled with hay and 
straw, and blankets, which were never washed and were full of 
vermin. The bunk house was overcrowded. The air in the night was 
very bad ; he felt dizzy and had a bad taste in his mouth in the 
morning. There were no spittoons, no privy vaults ; the men were 
often sick, catching cold and grippe. The drinking water was bad, 
just surface or swamp water. He felt quite tired in the evening. 
He worked at this place about five months. He had only from $12 
to $15 left. He then went to work with a company, from eleven to 
twelve hours a day, the pay being $35 a month and board. His 
work consisted in driving oxen. Two men slept in one bunk ; the 
bunks were in two stories; the floor was dirty; the bedding con- 
sisted of loose straw covered with a blanket. The drinking was good 



—spring water. The foreman was a good man. The goods in the 
commissary store were the same as elsewhere, but the price was from 
15 to 50 per cent higher than in the stores in town. 

A year ago he worked in the lumber camp of & Co. from 

eleven and one-half to twelve hours a day. The pay was $32 a 
month and board. Two men slept in one bunk; the bunks were in 
three stories. The bunk house was overcrowded; about 125 to 140 
men slept in the same bunk house. The floor was dirty ; it was diffi- 
cult to get through the mud. The bedding consisted of straw and hay 
on boards; there were '^bedbugs and lice"; although washed, the 
bedding could not be kept clean, because dirty men were going and 
coming. The board was very good, and the water was good, but the 
foreman was always speeding up and swearing with every word he 
said. Could not stand this job any longer than two and one-half 
days. From that place he came to the present camp. 

They work here eleven hours a day, and his pay is S3 2 a month 
and board. His work consists of driving oxen. He can work con- 
tinuously only two or three weeks ; then he gets his pay, goes to the 

town of P , drinks, fights, "just having a good time." Lately he 

has been working four weeks, and feels a need of "rest." He has 
not been out of work because he could not secure it; he can se- 
cure work any time. He has never stolen anything, never begged 
nor applied for charity ; but what he has done is heavy drinking 
(whisky), prostitution, and fighting. He has a gash on his face, and 
half of his nose was bitten off in a saloon fight many years ago. 
He has had three accidents in the lumber work : first, he had his 
hand broken; second, his leg was broken; and the third time his 
left shoulder was hurt. These accidents occurred by skidding. He 
is a "regular" lumberjack, because he makes his living by working 
in the lumber industry, drinks, fights, and lives in the way in which 
a lumberjack does. 

He thinks that the worst evil in the lumber camps is the bunk 
houses. They ought to be built similar to hotels. Every man ought 
to have his own small room, and the board should be provided as in 
city boarding houses. This would not cost much more for the com- 
pany than a camp costs now. The company gives enough to eat and 
the meals are prepared properly, but they serve the same meals day 
in and day out, week in and week out, at all times. After a time a 



man becomes tired, from the sameness of the meals. The camps 
are nowadays more or less permanent, because the railroad is 
bringing logs in and carrying the men to working places at great 

To the question as to what the government must do in order to 
better the conditions of the life of lumberjacks, he answered : " Close 
all saloons, and wipe out all the prostitute houses ; if this were done, 
the lumberjacks would take pretty good care of themselves as to 
bettering the labor conditions in the camps." 

Jungle, Red fern, South Dakota 

Number 3. Age twenty-four years, Dane. Seven years in this 
country. Came to America because it is the best country in the 
world. The best opportunities to better himself. 

Latin (high-school) education. Started out as a sailor. Learned 
steam engineering. Quit it because of the hardships and monotony 
in the life of a sailor. Pay was from $15 to S20 a month. Worked 
in various industries in America. Had a job in the shipyard at 
Philadelphia, $2 a day, ten hours; treatment first class. Quit. 
Started to go sailing on the Great Lakes — higher wages, more op- 
portunity of saving money. Could not get job because of the sailors' 
union; entrance fees S25 ; he had not the money. A job in factory 
— one day ; conditions bad. Secured a job in a rubber works ; $1.50, 
afterwards $1.75 ; ten hours a day. Laid off because of the business 
depression. Went out to a farm to pick potatoes at $1 a day, ten 
hours; the board was good. Returned to the East. No work for 
four or five months. Got money from home, about $200 — money 
he had saved. Went back to Buffalo ; paid his way. Was told that 
a steel plant was to be opened there. Did not get work there — 
because nearly all men taken were south European immigrants. 
Wanted to enter the union. The union did not let him in, because 
too many old members were around out of work. The Lake Car- 
riers' Association declared open shop. Got a job from this Asso- 
ciation. It was necessary to sign a statement declaring loyalty to 
Association or to union. He signed the union oath, after which he 
was fired. Started for the West. Believed that the West was 
better. Went broke in Chicago. Went into restaurant asking for 
dish-washing. Did not get work, but got meals. Went to Santa Fe. 







Beat his way down to Missouri. Went over the country roads not 
very far from Kansas City. Avoided the city because of the fear of 
getting arrested for vagrancy. Asked farmers for job. Begged. Got 
one job at 50 cents a day for five days, when the job was done. After 
buying some clothing, 25 cents left. Bought a loaf of bread, ice 
cream— all money gone. Went into Nebraska — westward. Several 
days without eating, except apples. Got a job with a German farmer, 
haymaking, $1.50 a day, ten to eleven hours. Good board, slept in 
the barn. Treatment was fine. Six days, the job was done. Partner 
got hurt very badly, trying to get a freight train, and was sent home 
East. Continued his way toward West. Freighted. Got a job on 
a farm in Nebraska, $18 a month. Chores and general farm work, 
ten hours. Board good. Got hurt after three months. Right foot 
was hurt by mowing machine. Two weeks ill. Doctor's bill, $15. 
Paid it himself. Was young, no company for him, the life was too 
monotonous on the farm. Working all the time in the fields, wages 
low, hours long. Quit, although the farmer promised $30 a month ; 
he could buy calves and pasture them, free of charge, and market 
them for his own benefit. Perhaps this was a little opportunity for 
him, but for the reasons stated he left. Went to Denver — westward. 
Two weeks. Looked for jobs through private employment agencies. 
Paid for fees Si. 50. Was shipped to Moffat Road; in railway con- 
struction camp ; $2 a day, or 20 cents an hour, ten hours ; two days. 
Quit. Got work in a coal mine. Outside night work ; $2.25, nine 
hours. Mine camp, four or six men slept in each room, two in a 
bed; dirty mattress, dirty blankets. Lousy. No ventilation, no 
spittoons. No sanitary rules ; no garbage collections. No toilet. 
One week. Left because of snowstorm. Went westward, beat his way 
to Salt Lake City. Broke. Two days in Salt Lake City. Asked a 
fellow in the street where a man without money could get a bed. 
Slept in a saloon. Begged. Sold his razor. Was shipped out with 
800 men to the Western Pacific construction camp in Nevada. On 
the road two days and two nights without meals. Some fellows 
ate raw potatoes picked up. W^ere taken to the end of the new track. 
Box cars, some with provisions. The men stormed the cars with 
provisions and took cheese, bread, and a few canned stuffs. He got 
several cans. Hiked twenty miles into the desert. Wanted to go to 
the Southern Pacific. Took a train down the line. Got a job on a 




construction camp on Western Pacific, $1.75 a day, ten hours. The 
board was poor. It was a slave-driving job ; lousy bunks in tents ; 
twelve days ; quit. Went south into another camp, conditions were 
slightly better, $2 a day, better work. Quit. Got sick from cold. 
No medical aid. Went to California, to San Francisco ; 59 cents in 
pocket; three weeks. Was on Barbary Coast. Hung around the 
red-light district. Down-and-outs hang around there, for the "sports" 
(rich people) come there, spend money lavishly. He did begging, 
Entered a mission called "Whosoever Will." He wanted to have a 
Christmas breakfast, promised by the mission. About 2000 people 
had gathered, the street was full ; a riot almost occurred. The hungry 
people were waiting for that breakfast the whole night. He got in- 
side. Got for breakfast rotten fish, could not eat it ; two slices bread 
and coffee— bread was all right. The mission wanted the men to 
come for dinner, for parading through the streets. He refused, his 
self-respect was against it. (The men conducting the "Holy Mis- 
sion" had made $300,000 out of these poor people through their 
work, donations, and any kind of manipulation. The mission crooks 
were afterwards arrested. ) 

He left for the South to pick oranges ; put to work by police on 
street cleaning in a small town. Worked a day, then told to get out 
of town. No trial. Went to Los Angeles. A job for the city, pick 
and shovel, $2.25 a day, eight hours. Worked five months. Quit- 
too hot. Went sailing. One year sailing. Got sick. Thought he 
had consumption, but had only cold. Went to Portland, Oregon. 
Went to work in Columbia Digger Company, S50 a month. Board 
and room were good. Worked eight months as second engineer. 
No more work. Laid off in the winter time. $125 saved. Went to 

Los Angeles. 

Joined I. W. W. in Portland. In Los Angeles was elected secretary 
of this organization, but did not get any pay. 

Took part in the Madero Revolution in Mexico. Three months on 
the battle ground. The command had about 200 men; about half 
were Americans. It had control over several towns. He did shoot- 
ing. He is sure he killed one Federal. Was elected financial secre- 
tary of a town. No pay. Was handed about Si 900. Bought 
ammunition. Had machine guns made in Los Angeles. Their com- 
mand got defeated by Federals who had 1500 men. The command 


1 * 


in which he was fighting lost three or four men. Retreated to the 
United States, surrendered to the United States troops. He beat his 
way across the line. Went to Los Angeles. Was hidden there for a 
time. Went to San Pedro. Got a steam schooner. Went to San 
Francisco. Then to Portland. Had little money, about $io. Could 
steal in Mexico — big money, but did not, the money belonged to 
his fellow workers. Went to work right away in Portland for the 
same company as before. Conditions the same. Worked there six 
months. Job done in winter; $150 saved. All winter there in Port- 
land. Got a job of dish-washing, $8 a week and meals, twelve hours, 
two weeks. Quit — too long hours, not enough money ; out of work 
two months. 'Got a secret disease. 

In 19 13 went to a lumber camp near Seattle, Washington, to drive 
donkeys, $3.25. Board good. Slept in bunks. One-man bunks in 
two-layer tiers. Bedding straw, own blankets, vermin. No laundry, 
washing, bathing, toilet facilities ; no screens, no sanitary rules. 
Worked eleven hours ; had one and one-half miles to hike out to the 
work-place each day. Got up about five o'clock; stopped at five 
forty-five at night. Worked two weeks. Quit. Long hours. Bad 
conditions. Went to Portland to work for the same company. Later 
he worked on a boat of the same company. Joined the new Long- 
shoremen's Union. This fought another union but lost out. Went 
to work for the Columbia Digger Company. Conditions the same. 
Work the same. Worked to the first of January, 19 14. Got laid 
off. No work. Took a contract to chop cordwood, 500 cords, $1 a 
cord. Spent all his money for tools and provisions and shipment 
out to the place— spent about Si 00. When he, with his partner, 
got there, they discovered they were cheated by a crooked contractor. 
No work. 

Returned to Portland. Was broke. Partner got $10 from his 
father. Took another contract to clear land, two acres, $50 an acre ; 
and to cut 100 cords of wood, $1 a cord ; got cheated also ; the land 
was harder to clear than the owner told. It rained and snowed also. 
Left. Did not earn a cent during one and one-half months of work. 
Were broke, absolutely— provisions all gone, the farmer did not even 
take their tools to the depot, because he had not time ; he really 
wanted to have their tools. Got another job on a farm, 20 cents an 
hour to clear land ; got potatoes, apples, and milk free. Made about 



$10. Work done. Went to Portland. Beat his way to Seattle. 
Nothing doing in the woods. In Seattle about a week. Stayed with 
a friend. Went back to Portland, beat it. Broke. Stayed down on 
the dredge, even slept there. Went hungry. Went to work for that 
company — again S60 a month and own board. Worked until the 
latter part of May. No work. Laid off. Got another job for another 
company as a deck hand, S45 a month ; good board ; too long hours, 
— fourteen to fifteen hours, sometimes only four hours for sleeping ; 
slept in the ''dog hole." Worked twenty days. Quit — could not 
stand it. Went to Seattle, June 21 ; no work in Seattle. Started for 
harvest in Montana, beating his way. Got ditched lots of times. 
Paid to carmen, for the tips, from 25 to 50 cents every time. He 
had some money, bought some stuff. Made tramp "mulligan" in 
jungles. No jobs in Montana. Thousands of idle men there; you 
could not even buy a job there. Came to Aberdeen, then to Redfield ; 
ten days here, out of work. Had money for first two or three days. 
Now about seven days broke. Begging of farmers, asking for work ; 
these give meals anyhow. Sleeps in box cars and haystacks. 

Immediate plans : to work here in the harvest fields, then in North 
Dakota, then elsewhere to save money, to go home to his mother in 
Denmark, and to stay there more or less permanently. 

In Los x\ngeles lived with a girl for four months as married 
people; she got $5 in a department store; he got S13.50 a week. 
The best time he ever had in this country. Loved each other. Could 
not marry. Wages were low ; were afraid. 

The number of casual laborers is growing in this country. More 
men are falling into the ranks of down-and-outs than in previous 
years. Criticizes American Federation of Labor — the form of or- 
ganization is out of date ; most of the leaders are controlled by big 
employers. Criticizes socialists. They have turned from economic 
struggle to politics. The socialists are politicians for themselves. 
In fact they have traded the interests of the working people for the 
interests of the petit bourgeois. 


He is the leader and spokesman of the I. W. W. people and also 
the harvest hands (about 500) in Redfield. He is quite an intelli- 
gent boy, but all signs show that he is going downward. If he 


continues to migrate he may become a hobo and afterwards a tramp 
of the common type. In the jungle of the harvest hands he addressed 
the crowd. All the men, with a few exceptions, expressed approval 
of the sentiments of the speech when he called for a show of hands. 
He did not mention the I.W.W. nor wear an I.W.W. button, and 
he claimed in private conversation with me that he was not a 
member. He says that it's too hard to keep up the 50 cents per 
month dues. Notes taken on his speech are as follows : 



"Industrial unrest?" If a man is treated like a dog he's a fool if 
he don't bark, ain't he? People accuse us of advocating violence. 
We don't believe in violence except for self-protection. All societies 
protect themselves against the unsocial acts of individuals. Men 
are hanged for murder, for example. So we believe that we have the 
moral right to prevent a man from working for $2.50 a day when 
we are fighting for $3. 

P. W. Speek 


The great things that need to be done are to reduce the hours of 
labor and increase the wages. If the hours of labor are reduced from 
twelve or ten to eight, more men will be employed and there will be 
less unemployment. If the hours of labor are reduced enough there 
will be work for everybody. 

You men have got to stand on your own feet and help yourselves. 
Nobody else will help you — neither Jesus Christ nor anyone else 
sitting up in the clouds above you can do anything for you. Legis- 
lation is bound to fail. What good does the minimum wage law do 
you ? The courts won't stand for such a law being applied to men. 
Workmen's compensation laws are frauds. If a man gets hurt, what 
does he get? Only half or two thirds of his wages and that at a time 
when his expenses are greater than usual. We are not interested in 
old-age pensions, because we don't live long enough to get old. 
Labor exchanges won't help much. I've been in England where they 
have them and where they have old-age pensions, but I never saw 
such poverty anywhere as I saw in England. We have child labor 
laws in this country, but they are not enforced. The trouble at 
Lawrence showed that. Many good bills are introduced by well- 
meaning men, but before they become law, if they become law at all, 
they are twisted all out of shape by the pressure from special in- 
terests. President Wilson is a good man. I voted for him myself. 
But what can he do? You men can trust no one but your own 
leaders, and even your own leaders sell you out sometimes. 

W^e have no interest or hope in political action. Most of us are 
disfranchised, because we can't stay long enough in one place to get 
a vote. We have to keep moving to find work. We don't bum our 
way on the railroads, sleep and eat in the jungles, and wear poor, 
dirty clothes because we like to do it. We do it because we can't 
help ourselves. Our only salvation is organization— one big organi- 
zation of all workers. When we get that we can take the industries 
we work in and give work to everybody. Ownership does not amount 
to anything then. But this can't all be done in a day. It will have 
to be done gradually and you men will have to do it. 





TO THE citizens of New York City the homeless man needs no 
introduction. According to a census made by the New York 
City Police Department for the United States Bureau of Labor Sta- 
tistics on the night of January 30, 191 5, he was here some 26,000 
strong, spending the night in the Municipal Lodging House, at the 
Farm Colony of the Department of Public Charities, at the Ellis 
Island Immigration Station, in immigrant homes, in cheap lodging 
houses, in employment agencies, in missions, in the rear rooms of 
saloons, in bread lines, and on public thoroughfares. No observing 
person has walked through our down-town parks, through the Bow- 
ery or similar streets, without having at least a passing acquaintance 
with him. 

Withdrawn from the activities and responsibilities of a normal 
family life, he is not unlike many men who, living in hotels, clubs, 
and boarding houses, might in the strict sense of the word be called 
homeless. From these he differs, however, in that his loneliness 
is often accompanied either by unemployment or by a complexity of 
disabilities which make him unemployable. He is not only home- 
less but is often without food, shelter, or money, and in most cases, 
if a worker at all, he is a casual laborer. 

To the citizens who come into closer contact with the homeless 
man than is afforded in a walk through the Bowery or Union 
Square, such a description as the foregoing, however, proves inade- 
quate and misleading. An investigation of some 2000 men whom 
New York City lodged at the Municipal Lodging House in March, 
1914, indicated that there is no one type of homelessness, and that 

^From Report to the Advisory Social Service Committee of the Municipal 
Lodging House, New York, September, 191 5, pp. 9-22. 


no two homeless people are alike. Each one is unique in himself : 
the product of a different inheritance, different environments, and 
different experiences ; the possessor of a different disposition, dif- 
ferent capabilities, different habits, different disabilities, and different 

The men we lodge at the Municipal Lodging House are as widely 
different as the transient guests of any New York City hotel. They 
are as different as the causes which have taken them away from the 
normal life of society. There are old men over seventy, young 
runaway boys, orphans, and men who should be in the prime of life. 
There are strong men, crippled men, blind men, and diseased men 
in urgent need of hospital care. There are casual laborers who have 
been idle less than one week, men who have failed in their business 
or profession, and vagrants who frankly avoid work. There are 
men who have spent their lives in New York City, and nonresidents 
and aliens with no legal claim on the city's charity. There are tem- 
perate men, habitual drug-users, and inebriates ; men who are nor- 
mally minded, and men who are mentally defective. There are 
professional beggars and men who hold the beggar in contempt. 
There are white men and colored men ; single men, married men in 
search of work, and family deserters ; Catholics, Protestants, and 
Hebrews. There is as wide a divergency among homeless men as 
there is among the rest of mankind. 


Given the best will in the world, no effort to deal with homeless- 
ness can go very far without facts. W^hen men gather cold and 
hungry and ragged in a long line outside the Municipal Lodging 
House, no one can tell offhand by looking at them why they are 
down and out, or how they can be helped in self-respecting fashion 
back to the normal life of society. 

We need not, however, begin in absolute ignorance, thanks to a 
very important investigation made at the Municipal Lodging House 
in March, 19 14, under the direction of the Commissioner of Public 
Charities. Fifteen hundred men were studied at that time by a 
staff of fifteen investigators. At the same time a medical examina- 
tion of 2000 men was conducted by fifteen medical examiners. This 








investigation represented the first large attempt in America to find 
out about the men who take refuge in a municipal lodging house. 

The facts brought out by this investigation and by others recently 
made in New York City show that the men who frequent the 
Lodging House can be classified roughly into two distinct though con- 
stantly merging groups ; namely, the unemployed and the unem- 
ployable. There has been no adequate method perfected for the 
separation of unemployable individuals from the body of the un- 
employed which would make possible any sharp classification. 

Out of 1426 men who answered the inquiry regarding the length 
of time they had been unemployed, only 6, or one half of i per 
cent, claimed to be working. All but one tenth of the total, 1274 
men, had been unemployed over one week ; and 924, practically 
two thirds, had been out of work for over a month. One hundred 
and two of the men had been idle over six months. 

These figures, of course, refer only to the length of time the 
men had been idle prior to their investigation in March, 19 14. They 
do not indicate how long the men had been previously employed 
or how frequent had been the periods of their past unemployment. 
It should be pointed out, moreover, that this inquiry preceded the 
more abnormal period of unemployment in the winter of 19 14-19 15. 

The reasons given by the applicants for coming to New York 
City were tabulated only in the case of those who had been here for 
six months or less. Out of 417 of these, 306, a large majority, 
claimed to have come to this city in search of work. While it is 
necessary to make allowance for probable inaccuracies in many of 
these claims, they undoubtedly indicate conditions of honest unem- 
ployment in the case of a substantial number of men who frequent 
the Municipal Lodging House yearly. 

This conclusion was substantiated by letters received from past 
employers of many of the men. These letters point out that, in a 
number of cases, the unemployment of men was due neither to their 
inability to hold a job nor to their unwillingness to work, but simply 
to the fact that they could not find work. 

The following extracts are illustrative : 

(i) A chemical manufacturer : "P. F. employed here as a pol- 
isher and washer. Work satisfactory. Services not required after 
busy season." 



(2) An automobile dealer: "J. I. was honest, reliable, and effi- 
cient. He left here on account of the slackness of business. Would 
reemploy him in our busy season." 

(3) A building contractor: "J. L. left because our work was 
completed. We expect to resume work about March 25 and might 
be able to reemploy him then." 

(4) A bridge contractor: "C. S. left because of the comple- 
tion of work. We would reemploy him if conditions were favorable." 

(5) The manager of a shirt company: "We would reemploy 
J. M. if work were not so slow." 

(6) A teaming contractor: " G. K. left my employ because of 
the scarcity of work. Scarcity of labor in this country has put many 
a good man on the road without money or food." 

These letters bear out a fact that is now well recognized. A 
United States Census Report of 19 10 showed that in the preceding 
year a total of 117,806 more persons were employed in the manufac- 
turing industries of New York State in January than in October. 
Such fluctuations in the demand for labor are not confined to one 
industry or to one season; and occasionally, as in the winter of 
1914-1915, they demoralize the entire labor market. Unfortunately, 
the casual laborer — who all too frequently becomes also the home- 
less man — is made to bear the brunt of these fluctuations. 

Of the 2000 men who were given a medical examination, 1774, 
approximately 9 out of every 10, were, according to the adjudg- 
ments of the examining physicians, physically able to work. Twelve 
hundred and forty-seven, or 62 per cent of the total, were con- 
sidered physically able to do regular hard manual labor ; 354, or 18 
per cent, to do medium hard work; and 173, or 9 per cent, to do 
light work only. Two hundred and twenty-six, i out of every 10, 
were adjudged physically unable to work.^ 

The results of this investigation show, moreover, that a substan- 
tial proportion of the men who apply at the Municipal Lodging 
House are unemployable — men whose unenviable lot it is to be the 
less fit in the struggle for survival. Many homeless men, though 
willing and anxious to work, are chronically unemployed because 
they are too inefficient to hold a job even under normal indus- 
trial conditions. More efficient than these, yet less eflicient than 

1 These 226 men do not, however, include all of the unemployables found 
within this group. 





normal workers, are many others, frequently unemployed because 
they are the first to be dropped from the pay roll when work 
becomes "slack." Many others, moreover, are unemployable be- 
cause, being neither anxious nor willing to work, they frankly avoid 

The factors behind the inefficiency of a man have usually im- 
bedded themselves so far into his past that a clean-cut dissection 
of them is practically impossible. No such experiment was attempted 
in this Municipal Lodging House investigation. Certain conspicuous 
factors, however, were frequently found contributing to the inef- 
ficiency of the men investigated. These fall naturally around six 
distinct though constantly merging groups of inefficient homeless 
men. They are (i) the physically handicapped, (2) the mentally 
handicapped, (3) the inebriate, (4) the habitually idle, (5) the 
untrained, and (6) the aged. 

Of the 2000 men who were examined by the physicians, 226, 
or II per cent, were adjudged physically unable to work; 80, or 
4 per cent, were temporarily disabled, and 146, or 7 per cent, were 
permanently disabled. Fifty-nine of the 2000 men had disabilities 
which demanded hospital treatment, and 239 of them were recom- 
mended for dispensary treatment. The leading factor physically in- 
capacitating men for work was tuberculosis; others were senility, 
nephritis, heart disease, acute pleurisy, and blindness. 

That a number of the homeless men included in this investigation 
were mentally defective and in that respect unemployable is evi- 
dent from a study of the records of some 200 who were examined 
by the Clearing House for Mental Defectives. The following ex- 
tracts from the records of some of these men are illustrative : 

No. 90. A laborer, age twenty-four, had spent his life in New 
York City. " Patient presents a very simple, foolish attitude ; he 
has no judgment, does not reason, and has absolutely no purpose in 
life. He does not care to work but begs and bums his way. He 
has no friends and is a recluse. He is mentally defective." He had 
served a six months' sentence on Blackwcll's Island for vagrancy. 

No. 1152. A laborer, age fifty, had been in the United States 
twenty-five years and in New York City fifteen vears. He was 
diagnosed as an imbecile. He had never held a job for over six 
months, working only long enough to get money with which to 
become intoxicated. 



Of 1482 men who made statements regarding their habits, 1292 
— approximately 9 out of every 10 — said that they drank alco- 
holic liquors. Six hundred and fifty-seven, or 44 per cent, said 
that they drank excessively; 635, or 43 per cent, said that they 
drank moderately; and 190, or 13 per cent, claimed to be total 

Of the 2000 men who were given a medical examination, 775, 
or 39 per cent, were diagnosed as suffering from alcoholism. Ac- 
cording to Dr. James Alexander Miller, these "figures probably do 
not represent by any means the number of individuals who were 
alcoholic . . . but are rather indicative only of the number who 
manifested acute evidence of that condition at the time of the investi- 
gation." Not infrequently were responses from past employers of 
these men such as are here quoted : 

"His failing was drink. I would not employ him again." 

"He used intoxicating liquor to such an extent as to hinder his 
work." ' 

"Drink interfered with his work. If he could keep away from 
liquor, he would be O. K." 

"Discharged for drunkenness." 

Of the 102 men who had been unemployed over six months, 50 — 
approximately i out of every 2 — had been idle one year or over. 
The means by which they lived is indicated in the answers of 1482 
of the men investigated. Of this number, 317 — i out of every 5 — 
admitted that they begged either occasionally or regularly. 

Some of these men had degenerated through repeated periods of 
idleness into a voluntary state of unproductiveness and parasitism. 
Others were unemployed, apparently, because they had never dis- 
ciplined themselves to obey orders. Others, moreover, were unable to 
keep their minds on their work, either because they were obsessed 
witji an idea that they were more fit for something else, perhaps in a 
different city or state, or because some misfortune, such as the loss of 
a friend, had left them without the initiative and the purpose which 
had made their work worth while. 

Given a well-stocked market of unskilled laborers, the less fit — 
those handicapped by some physical or mental defect — are, obviously, 
forced either to look to other sources than to unskilled labor for 
their livelihood or to become dependent. Unfortunately they are 




i * 


all too often forced to choose the latter alternative, because they lack 
the training required for positions which they might otherwise ca- 
pably fill. The records of this investigation show that a number of the 
men interviewed could have been self-supporting if they had been 
trained in some occupation which they were physically and mentally 
able to carry on. Such statements as the following were not in- 
frequently received from past employers of these men : 

"Get suitable work for him." 

" Might be all right in the right place." 

"He should have better education in the trade." 

Even in a Utopian society one might expect to find a certain 
number of old people among the unemployable. Although most of 
the men included in this investigation had left the ranks of industry 
for causes other than old age, the examining physicians found se- 
nility, next to tuberculosis, to be the largest single factor leading to 
permanent physical disability. Out of 146 permanently disabled men, 
14— I out of every 10— were unable to work on account of old age. 
It was found, moreover, that of 1467 men who gave their ages, 
115— I out of every 13— were sixty years of age or over. Eleven 
of the men were seventy or over. 

Physical disability, retarded mentality, inebriety, habitual idle- 
ness, lack of training, and old age,— these are some of the factors 
frequently found contributing to the inefficiency of these men. 
Perhaps in no single instance does any one of them appear alone. 
In many, several are found in various combinations. With the 
exception of old age, each of these factors augments and is aug- 
mented by the others, and all of them contribute jointly to the 
production of a group of dependents, more or less unemployable, 
who are the city's recurrent guests at the Municipal Lodging House! 
This investigation, moreover, revealed the fact that among the 
lodgers at the Municipal Lodging House were many men who had 
no legal claim upon the city's hospitality. According to the state 
charities law, at least one year in residence is required before a 
person can become a legal resident of New York City, which alone 
would make him a bona fide legal claimant of the city's charity. 

Of the 1429 men who stated the time they had been in New York 
City, 588 — 2 out of every 5— had not been here over one year, 



while 322 — I out of every 5 — had not been here over two months. 
One 'tenth, or 141, of the men had not been here over ten days. 
Some of these men were residents of other counties and states ; 
some were aliens, and some were runaway boys. 

Of the 1448 men who stated their birthplace, 621, or 43 per 
cent, were foreign born. Thirty-six of these men had not been in 
the United States over one year, and 74 had not been here over three 
years. There were, moreover, 304 applicants at the Municipal 
Lodging House in March, 19 14, who were rejected from this investi- 
gation because they could not speak English. Had these men been 
included, these numbers would have been much larger. 

The federal government has the power of removal of an alien 
improperly admitted to the United States, but this power ceases 
after he has been in this country three years. The law of New 
York, however, gives the State Board of Charities unlimited author- 
ity for the removal of alien and nonresident poor. The law reads : 

The State Board of Charities, and any of its members or offi- 
cers, may, at any time, visit and inspect any institution subject to 
its supervision to ascertain if any inmates supported therein at a 
state, county or municipal expense are state charges, non-residents 
or alien poor ; and it may cause to be removed to the state or country 
from which he came any such non-resident or alien poor found in 
any such institution. (State charities law, constituting Chapter 55 
of the Consolidated Laws, Section 17.) 

According to the secretary of the State Board of Charities, how- 
ever, it is the policy of that body to return nonresident and alien-poor 
inmates of the Municipal Lodging House only in very exceptional 
cases. "In the first place," the secretary states, "the board doubts 
the wisdom of returning them generally, and in the second place it 
does not have an appropriation sufficient for the purpose." 

Following are extracts from the records of some of the nonresi- 
dent and alien applicants among the men investigated at the Munici- 
pal Lodging House in IVIarch, 19 14, who were subject to removal 
from the state under the law : 

No. QQ2. An English seaman, age sixty-three, had been in the 
United States and in New York City eight weeks, during which 
time he had been idle. He had been discharged from a ship while 
in this port because of a broken thigh. 




No, J258. A resident of Massachusetts, age twenty-seven, had 
been in New lork City five weeks. Except for a few jobs at sjiow- 
shoveling, he had been idle during this entire time. His brother 
wrote that the man had a home in Massachusetts. 

^0. ijjy. A resident of Pennsylvania, age twenty-three, had 
been in New York City one day. In that state he had been an 
inmate of a penal institution for one year. A past employer wrote 
that he thought the man was mentally defective. His father wrote, 
" I hope he will soon return home." 

No. 1377. A German candy-maker, age twenty-seven, had been 
in the United States and in New York City two years. He had 
been at the IMunicipal Lodging House ten times in January, 1914, 
and had served a thirty-day sentence at the workhouse. 

Of the 1467 applicants giving their ages, 26 were boys under 
nineteen years of age, and 48 were under twenty-one. Eleven of 
these boys were foreign born ; 16 were native born of foreign parent- 
age ; and 20 were native born of native parentage. That a number 
of them had run away from their homes was shown by their own 
statements and by letters from their friends and relatives. 

No. 325. An American boy, age nineteen, came to New York 
City "to see the town" two months prior to his application at the 
Municipal Lodging House. His father wrote from New Orleans 
that the boy had run away from a good home there. He asked to 
have the boy returned. 

No. 363. A New York City boy, age nineteen, had run away 
from his grandfather's home in the Bronx. The grandparent wrote 
that he had given the boy a good home, but that he had run away. 

No. 107 1. An American boy, age seventeen, had "bummed" his 
way to New York City four days prior to his application at the 
Municipal Lodging House. He had run away from his aunt's home 
in Washington, D. C, to visit a sister in New York, whose address 
he did not know. His aunt wrote, " Send him to me at once." 


The need for food and shelter is practically the only one com- 
mon to all of the men who apply at the Municipal Lodging House. 
It is a need, fortunately, which the city can meet en masse by the 
provision of so many beds, so many loaves of bread, so much soup, 
so many cups of coffee, so many bowls of cereal, so much milk, so 
much sugar, a building for the housing of these supplies, and a 
force of employees for their administration. 




But have the needs of the lodgers been met when they have been 
fed and given a night's lodging ? Is this common need the greatest 
need presented by all or by any one of them ? Obviously it is not. 
They need food and shelter because they lack the means of self- 
maintenance. They lack the means of self-maintenance either be- 
cause they cannot find a job or because they are handicapped by 
physical and mental abnormality, by inebriety, habitual idleness, 
lack of training, or old age and are therefore unable to hold a job 
when they find one. 

From the facts brought out in these investigations, it is obvious 
that any constructive program for meeting the needs presented by 
the homeless must be directed toward all of their disabilities. The 
whole man must be treated, not merely his appetite and his desire 
for sleep. 

Food and shelter may be the individual's greatest need. In 
most cases, undoubtedly, it is not. It is but a symptom of another 
need — the need of a job, or the need of constructive treatment for 
those disabilities which keep him from a job. 

Every man who applies for food and shelter at the Municipal 
Lodging House should have a social investigation as well as a 
physical examination in order that an intelligent diagnosis of his 
condition can be made. Facts can thus be obtained which will serve 
as the basis for an intelligent plan for his treatment. 

The old method of lodging the homeless man and passing him 
on or imprisoning him ; of giving him work in a wood or stone yard 
or directing him to the nearest employer, with little regard for the 
complicated causes of his condition and less for the opportunity of 
developing within him the power of self-maintenance,— the old pro- 
gram has been wasteful, wasteful of men and wasteful of the city's 
charity fund. 

Each homeless man who applies at the Municipal Lodging House 
needs individual attention. Otherwise he would not be there. Be- 
hind his need for food and shelter are basic needs which demand 
intelligent diagnosis and treatment. The employable man without 
a job needs to be directed toward a job without a man — a job for 
which he is fitted. The unemployable man needs either to be treated 
for the causes of his dependency, to be protected from the competi- 
tion of the more fit, or to receive both such treatment and protection. 


, .tit 





The physically handicapped need to be healed as far as is within 
medical and surgical power to heal ; the mentally handicapped 
need to be segregated, protected, and trained ; the inebriates need 
to be restored to health and disciplined for rational living ; the 
habitually idle need to be constrained (or compelled) to work; the 
untrained need to be directed toward an occupation at which they 
can earn a livelihood and be trained for self-support ; and the aged 
need to be placed in homes. Dependent nonresidents, aliens, and 
runaway boys need to be returned to their homes and to their 
friends. If agencies for meeting these needs were maintained and 
coordinated in the Municipal Lodging House as a central clearing 
house for the homeless, that institution would serve as an avenue 
of approach not only to a meal and a bed, or perchance to prison, 
but to rehabilitation. 

Robert B. Brown 





FOR a clear understanding of the northern migration of negroes 
in the years 191 6 and 191 7 a knowledge of the general move- 
ment of the negro population since 1865 will prove very useful. Sev- 
eral recent writers have been prone to emphasize the development in 
the negro within the past two years of "a sudden desire to move," 
but a little investigation soon reveals the fact that the black man, ever 
since the day of his emancipation, has shown a tendency to migrate. 

At the close of the Civil War, when told that he was free, the negro 
at once began to put his freedom to the test ; and as the most palpable 
evidence of his liberty was his ability to come and go as he chose, it 
was only natural that he should begin to move about. At the end 
of every year thousands of tenants in the Southern black belts may 
still be seen removing to other farms, in many cases without even 
taking the pains to examine beforehand the lands they are to culti- 
vate or the houses they are to occupy. Such migrations do not appear 
in the census returns, but their social and economic importance is 
far-reaching. Dr. Booker T. Washington often found it necessary to 
urge his people to abandon their moving propensities and to settle 
down and acquire property. At gatherings of negro farmers he was 
fond of narrating a homely story of a chicken which belonged to one 
of these peripatetic tenants and which, from long-acquired habit, 
would walk up to its owner's cabin door on every first of January 
and squat down and offer its legs to be tied, preparatory to its 
journey to the next farm. 

The possibility of the migration of a great number of freedmen 
from some sections of the South became evident almost as soon as 
the Civil War was over, and as early as November 27, 1866, Gov- 
ernor James L. Orr, of South Carolina, stated in a message to the 
legislature that the negroes were — 

iFrom Journal of Political Economy, Vol. XXV (191 7), PP- 1034-1043. 

VT-9 -jr^WL- -•HKSr>A«U 





invaluable to the productive resources of the state, and if their labor 
be lost by removal to other sections, it will convert thousands of 
acres of productive land into a dreary wilderness. For this reason, 
I have felt it to be my duty to discourage their migration. The short 
crops of the present year should stimulate the planter and farmer to 
renewed energy and enterprise. He will, however, find his lands of lit- 
tle value if he cannot command labor to cultivate them. If the negro 
remain here, his labor must be made sufficiently remunerative to sub- 
sist and clothe him comfortably. Schools must be established to 
educate his children, and churches built for his moral training.^ 

This threatened migration, to which Governor Orr referred, was 
a westward movement, from South Carolina, Georgia, Alabama, and 
Mississippi to Louisiana, Arkansas, and Texas. It differed materially 
from the later migration to the North. In general, the westward 
movement in our country is actuated by causes similar to those that 
prompt European migration to America. It is a movement from a 
highly developed, densely populated region, where the economic stress 
is acute, to a region more sparsely populated, with undeveloped re- 
sources, where the struggle for existence is not so keen. This ex- 
plains the lure of the Southwest for the negro, as well as that of all 
the West for the white man. But there is another movement of 
population that operates in a manner quite the reverse of the prin- 
ciples just enunciated. This is the cityward movement, a migration 
to a region of denser population, keener competition, and more acute 
economic stress. Such a movement is the Northern exodus of negroes 
in 1916-1917. 

In the late sixties and early seventies the westward migration of 
negroes attained considerable headway. It was at first a movement 
of individuals and soon became one of groups. Railway and land 
companies carefully fostered it and had their agents in various sec- 
tions of the South, very much as transatlantic steamship companies 
have maintained their runners in the remote rural districts of southern 
and eastern Europe to encourage emigration to America. A well- 
known negro educator states that in 1874 he heard one of these agents 
boast that he had induced 35,000 persons in South Carolina and 
Georgia to leave for Arkansas and Texas.- This westward movement, 

1 South Carolina House Journal (1866), pp. 20-21. 

-W. H. Crograan, Talks for the Times (Atlanta, 1896), p. 54. The agent's 
statement is probably much exaggerated, but there must have been a consider- 
able migration to have prompted him to make such a claim. 



however, was soon dwarfed into insignificance by a threatened migra- 
tion on an unprecedented scale to Kansas from the lower Mississippi 
Valley early in the spring of 1879. The '' Kansas Exodus," as it came 
to be called from its alleged resemblance to the flight of the Israelites 
from Egypt, presents several striking analogies to the movement of 
1916-1917. When the exodus to Kansas began, there was the same 
suspicion, as noted in 19 16, that it was the result of efforts to colonize 
negro voters in the North and make certain states safely Republican. 
In both cases this suspicion was finally allayed. There were also, in 
1879 as in 1916, the assumption by a portion of the Northern press 
that the negro was fleeing North to escape ill treatment, and the 
tendency on its part to lecture the South for its shortcomings in 
dealing with the black man. One may also note, in both instances, 
the same sort of uneasiness among the planters in those districts from 
which emigration had been excessive, the same assurance by some 
that all of the negroes would eventually return, and the same intro- 
spective editorials in Southern newspapers, with the candid admission 
that conditions might be better for the negro, but with the added 
assertion that even as things were the South was a better place for 
him than the North. In both instances also may be observed the 
final recognition that the causes of the movement were basically 
economic. Of course, there are certain contrasts as well as parallels 
in these two movements, but the latter appear to be by far the more 

The Kansas movement of 1879 was due in large measure to the 
agricultural depression in the lower Mississippi Valley, but it was 
precipitated by the activities of a host of petty negro leaders who 
sprang up in all parts of the South during the period of reconstruc- 
tion. Foremost among these were Benjamin (better known as 
"Pap") Singleton, of Tennessee, and Henry Adams, of Louisiana. 
Singleton styled himself the "Moses of the Exodus" and, personally 
supervised the planting of several colonies in Kansas.^ Adams 
claimed to have organized a colonization council which attained a 
membership of 98,000.- 

The exodus to the "Promised Land" of Kansas began early in 

^W. L. Fleming, "'Pap' Singleton: the Moses of the Colored Exodus," 
American Journal of Sociology, Vol. XV, pp. 61-82. 
2 Senate Report, 693, Part II, 46 Cong., 2 Sess. 

f A I 





! i 

» I 



March, 1879, and continued until May. The total number of emi- 
grants, most of whom went to Kansas from Louisiana and Missis- 
sippi, has been estimated at all the way from 5000 to 10,000, and 
many thousands more had planned to move, but were deterred by the 
misfortunes of those who constituted the vanguard. Leaving their 
homes when the weather was becoming warm, the early emigrants 
reached Kansas when spring chanced to be unusually backward and 
the country was still bleak and desolate. Thinly clad and often 
without funds, they endured much suffering from want and sickness, 
and many of them became public charges. Societies were organized 
expressly to care for the "refugees," as they were called, and large 
numbers returned to their homes as soon as they were able, giving 
such dismal reports on their arrival as to dissuade others from fol- 
lowing their example. Perhaps a third of the emigrants remained, 
and many of these eventually attained a fair degree of prosperity. 
The movement was ill-advised, and too much based on the negro's 
sentimentalism. To him Kansas, pictured as the home of John 
Brown and the scene of many free-soil victories, seemed to be the 
ideal home for the black man. But he found on arriving a harsh 
climate, pioneer conditions, and small farmers who had no need of 
extra laborers and who were not especially friendly to the negro. 
That individuals from among this group of emigrants could surmount 
such difficulties and attain no small degree of well-being is to the 
credit of the race. While the exodus caused much suffering, de- 
moralization, and loss of property among the emigrants, it seems to 
have had at least one good result. In some instances it is said to 
have caused an improvement in the condition of the negroes who 
remained at home. In communities where there had been consider- 
able emigration there was said to have been a tendency to reduce 
rents and to offer the remaining tenants more favorable terms in 
general than had obtained prior to the exodus. Such a result would 
naturally be expected. 

In 1 888- 1 889 there was a considerable migration of negroes from 
southern Alabama to Arkansas and Texas, as a result of the activi- 
ties of labor agents.^ The rapid development of the mining indus- 
try of Alabama in the nineties caused a rapid influx of negroes into 
the mineral regions around Birmingham and was the cause of much 
^Southern Farmer, Atlanta, Georgia, June, 1889. 



uneasiness among the cotton growers of the black belt. The advent 
of the boll weevil caused a great migration of colored farmers in 
1 908-1 909 from the cotton fields to the cane fields of Louisiana. 
By 19 14 the cotton belt of this state had recovered from the de- 
moralization that followed the advent of the weevil ; and the sugar 
planters, depressed by the prospects of free sugar, were reducing their 
acreage and employing fewer laborers. A tendency toward a counter 
migration then showed itself, and labor agents again were active.^ 
These instances are cited in order to indicate that the Northern 
migration of 19 16-19 17 is no new and strange phenomenon. It 
differs from earlier movements chiefly in the matter of numbers in- 
volved. The European war has simply hastened and intensified a 
movement that has been under way for half a century. To the truth 
of this statement the reports of the census bear eloquent witness. 
In i860 there were 344j7I9 negroes in the North; in 1910 there 
were 1,078,336, an increase of 212.8 per cent for the fifty-year 
period. In the South for the same period the rate of increase was 
1 1 I.I per cent. In the last half century, therefore, the relative in- 
crease of negroes in the North has been nearly double that in the 
South. This shows a decided change from the conditions prevailing 
before the Civil War. At every census before i860, except that of 
1840, the negro population of the South showed a greater relative in- 
crease than that of the North. Since i860, however, the situation 
has been reversed, as is indicated by the following table : 

Percentage of Increase of Negro Population 







1 790-1800 . . . 



1 850-1 860. . . 



1800-1810 . . . 



1860-1870. . . 



1810-1820 . . . 



1 870-1 880. . . 



1820-1830 . . . 



1 880-1890. . . 



I 830-1 840 . . . 



1 890-1900. . . 



1840-1850 . . . 



1900-1910 . . . 



• Owing to the great irregularities in the census of 1870, especially as it relates to the Southern 
states, comparisons of this year with those of i860 and iSSo are wholly misleading, and in the fore- 
going table the percentages for these years are bracketed. 

iNew Orleans Times-Democrat, March 26, 1914. 



li i 


I i 



It thus appears that in every decade since the Civil War the negro 
popuLition of the North has been growing faster than that of the 
South. This increase can be accounted for in two ways only : by an 
excess of births over deaths and by immigration from other states. 
The meager vital statistics available indicate that while the death 
rate of the negro in the North is lower than that of the negro in the 
South, the birth rate of the Northern negro is also lower and is just 
barely sufficient to balance the death rate. The increase in the 
colored population of the Northern states appears therefore to be due 
almost wholly to immigration. The census fully substantiates this 
assumption. In 1910, 415,533 Northern negroes were Southern born. 
This is nearly two fifths of the entire negro population living in the 
North. Forty-seven per cent of the negroes living in New England 
in 1 9 10 and more than 50 per cent of those in the Middle Atlantic 
and East North Central divisions^ were born outside these sections. 
In four of the former slave states (Maryland, Missouri, Kentucky, 
and Tennessee) there were actually fewer negroes in 19 10 than in 
1900. These, it will be noted, are border states, where "the call of 
the North" is most likely to be first heard and heeded, and whence 
migration is easier and cheaper than it is farther south. It is also 
worthy of note that every one of the former slave states except Ar- 
kansas was "whiter" in 1910 than in 1900.- Indeed, if we exclude 
from our reckoning states having a negro population of less than 
2 per cent, the only states in the Union that became perceptibly 
"blacker" in the last census decade were West Virginia, whose per- 
centage increased from 4.5 to 5.3, and Oklahoma, whose increase was 
from 7 to 8.3 per cent. The increase in these states, however, is not 
large enough to give rise to problems like those in some sections of 
the old South. 

It is interesting to note that the New England states, before 19 10, 
were not appreciably affected by the Northern migration. In three of 
these states (Connecticut, Rhode Island, and New Hampshire) the 
percentage of negro population between 1880 and 19 10 actually 

'The Middle Atlantic and East North Central divisions comprise the states of 
New York, New Jersey, Pennsylvania, Ohio, Indiana, Illinois, Michigan, and 

2 While the percentage of negro population in Arkansas increased, it was only 
to the extent of one tenth of one per cent. 



declined, in Maine it remained stationary, and in Vermont and 
Massachusetts it showed a very slight increase. New Hampshire 
actually contained fewer negroes in 1910 than in 1790. 

Another ver\' interesting feature of the movement of negroes in 
the United States is the fact that, in spite of the northward tendencies 
just described, the center of negro population has been shifting 
steadily southward and westward. Since 1 790 the center has changed 
from southern Virginia to northeastern Alabama. This is due to the 
fact that the drift of negro population to the North before 19 10 was 
most pronounced in the border states of Tennessee, Kentucky, IMary- 
land, and Missouri, and that the increase in the states farther south 
more than offset the losses in these four states. 

The negro shows a tendency not only to move northward but also 
to move about very freely within the South. In fact, the region 
registering the largest net gain of negroes in 19 10 from this interstate 
movement was the West South Central division (Arkansas, Louisiana, 
Oklahoma, and Texas), which showed a gain from this source of 
194,658. The Middle Atlantic division came second with a gain of 
186,384, and the East North Central third with a gain of 119,649. 
On the other hand, the South Atlantic states showed a loss of 392,827, 
and the East South Central states a los^ of 200,876 from interstate 
migration. While the negroes have shown this marked inclination 
toward interstate movement, they nevertheless exhibit this tendency 
in less degree than do the whites. In 19 10, 16.6 per cent of the negroes 
had moved to some other state than that in which they were born, 
while the percentage for the whites was 22.4. For the relative extent 
of intrastate migration by the two races, figures are of course 

As has already been indicated, the cause of the migration, like 
that of practically all great movements of peoples, is fundamentally 
economic. But this simple statement does not tell the whole story. 
The causes may be grouped as beckoning and driving, the first group 
arising from conditions in the North and the second from conditions 
in the South. Among the beckoning causes in 19 16-19 17 were high 
wages, little or no unemployment, a shorter working day than on 
the farm, less political and social discrimination than in the South, 
better educational facilities, and the lure of the city. Among the 
driving causes were the relatively low wages paid farm labor, an 





unsatisfactory tenant or crop-sharing system, the boll weevil, the crop 
failures of 191 6, lynching, disfranchisement, segregation, poor schools, 
and the monotony, isolation, and drudgery of farm life. There is a 
noticeable tendency on the part of some negro leaders to attribute the 
movement chiefly to the unrest due to mob violence and other ills, 
social and political, that fall to the lot of the black man. When we 
note, however, that lynching for the past twenty-five years has been 
slowly but surely decreasing and that disfranchisement is no new 
thing, but has been an accomplished fact for more than forty years, 
it becomes evident that, whatever grievances of this nature the negro 
may have against the South, he has at least no Jtew complaint and 
therefore no stronger reason for migrating on this account in 19 17 
than he has had for several decades. If adverse social and political 
conditions are the main cause of the Northern migration, it is asked, 
why did the negro not go in the eighties and nineties when lynchings 
were four times as frequent as they now are and when disfranchise- 
ment was effected by "bulldozing" and tissue ballots rather than by 
the more peaceful method of constitutional amendment ? The answer 
to this question is that the negro has no greater grievances now than 
formerly, but that he has a much better opportunity for escaping 
these grievances than he has had heretofore. The driving causes in 
the South are not of themselves sufficient to bring about such an 
exodus as was recently observed. There must be an avenue of escape 
to apparently better conditions, and this was presented when the 
European war created a vacuum in the Northern labor market. 

The effects of this interstate migration, like the effects of late 
foreign immigration, are largely matters of the future. But certain 
postulates with regard to the immediate effects may be readily formu- 
lated. So far as the migrations tend to bring about an equilibration 
of demand and supply in the labor markets of this country, the effect 
will be beneficial. The abundance of crude, cheap, and easily man- 
aged labor in the cotton belt has not been an unmixed blessing. It is 
a well-established fact, too, that the negro does better in those dis- 
tricts where he is greatly outnumbered by the whites than he does in 
the black belts where he has little chance to study and emulate the 
white man's skill, thrift, and energy. The negroes who go North 
may thus increase their own productive capacity and, at the same 
time, by relieving somewhat the congestion of black folk in their old 



homes, may improve the economic status of their neighbors who re- 
main behind. A migration of negroes in any number is likely also 
to affect the attitude of the Southern employer of colored labor. It 
will tend to impress him with the idea of the black man's economic 
value as he had not been impressed before. The exodus of 1879 
effected such a change of attitude on the part of the Mississippi River 
planters. A large number of them assembled in Vicksburg on May 5, 
1879, and solemnly resolved " that the colored race has been placed by 
the Constitution of the United States, and the states here represented, 
on a plane of absolute legal equality with the white race," and " that 
the colored race shall be accorded the practical enjoyment of all rights, 
civil and political, guaranteed by the said constitutions and laws."^ 

The migration has also its debit side. As already stated, it is a 
cityward movement of a rural population, and as such is attended 
with all the difficulties and dangers incident to such a movement on 
the part of any people. But there are additional difficulties when 
the newcomers to a city — even a Northern city — chance to be 
colored. They must live in the least desirable part of the town, on 
filthy and neglected streets, and in poorly constructed, insanitary 
dwellings, for which they must frequently pay exorbitant rentals. 
There may be the additional handicap of industrial discrimination 
on account of race. 

Dr. W. H. Crogman, of Clark University, Atlanta, Georgia, a 
well-known negro educator, twenty years ago set forth the evils of 
this movement in the following words : 

Nothing was ever clearer to my mind than that this interstate 
migration has in it the seeds of moral death. It is a very Pandora's 
box. It strikes at the roots of those things by which only any people 
can hope to rise. It destroys the home wherever it is established, and 
prevents its establishment where it is not. It retards the progress of 
education and acts like a withering blight upon the influence of the 
churches. . . . Over and over again have I known persons to leave 
their native state and after wandering through several others to 
return finally to the very spot whence they had started, having in 
that time gained nothing, acquired nothing, except that which is -a 
property common to all bodies once set in motion — a tendency to 
keep moving.^ 

^Vicksburg Daily Commercial, May 6, 1879. 
2 Talks for the times, pp. 253-254. 



I I 


Ihis statement, in the light of later developments, appears unduly 
pessimistic, and would probably be modified by its author today ; 
but the fact cannot be gainsaid that the mere removal of the negro 
to another environment is not the ultimate solution of what we call 
the ''race problem"; at the most it can only modify the problem. 
As the European peasant does not escape all his economic ills when 
he stands for the first time under the Stars and Stripes, so the negro 
will still have his troubles after crossing the Mason and Dixon line 

Louisiana State University 

William O. Scroggs 



WE LACK labor. The railroads are crippled for want of it. The 
farmers hesitate to plant seed for fear they cannot get labor 
for the harvest. Factories, public utilities, ammunition factories, 
shipyards, send up a cry for men. Strangely enough, tens of thousands 
of men walk the streets of our cities in idleness in the midst of the 
labor shortage. Appeals to patriotism apparently go unheeded. High 
wages, instead of attracting them into steady employment, lead only 
to more frequent periods of idleness. They profiteer in the nation's 
day of stress as willingly as many of their employers. Neither im- 
pairment of our military efficiency nor the sufferings of millions who 
lack the necessities of life move them. What is the explanation? 
Why this anomaly? Why a labor surplus in the face of a labor 
shortage ? 

An explanation which at least points to one important cause of 
the phenomenon is this : labor is standing idle during a labor short- 
age because an unorganized labor market has impaired the efficiency 
and morale of hundreds of thousands of workers. Men have become 
accustomed to idleness, unaccustomed to sustained efforts. Irregu- 
larity of employment, migration from industry to industry, the 
cheap lodging-house, the saloon, pawnshop, brothel, municipal police 
court, and lack of continuing responsibilities have done their deadly 
work. Men who started out with ambition and promise have degen- 
erated into inefficient, irresponsible, migrator\' laborers— tens of 
thousands of them into almost unemployable "bums." 

Labor is not scarce in America so far as quantity is concerned. I 
question the probability of any quantitative shortage of labor dur- 
ing the war. If such shortages should occur, potential supplies 
of female and minor labor will fill up the gap. But labor of quality 

^Atlantic Monthly, Vol. CXXI (1918), pp. 773-783. 






is scarce in every manual occupation— in agriculture, mining, fores- 
try, manufactures, transportation; and' there is no reservoir from 
which that quality shortage can be relieved. Our hope for relief rests 
solely in such mobilization as will place the existing skilled labor 
where it will do the most good, in subdivision and specialization of 
tasks so that partly skilled persons may be able to perform them, and 
in intensive training of promising young workers for such work as 
they can be prepared for during the emergency. 

One of the most striking phases of the labor shortage is the scar- 
city of good common labor. Anyone knows that an employer who 
needs a machinist cannot use a casual laborer. It is not difficult to 
realize that a farmer who needs a dairyman cannot use a harvest- 
hand. But many people do not yet appreciate the fact that there 
are different classes or types of common laborers, just as there are 
different classes of mechanics. Degrees of reliability, intelligence, 
steadiness, and physical efficiency are of just as great importance 
among common laborers as degrees of skill among mechanics ; and 
the presence or absence of these qualities means the presence or ab- 
sence of ability to earn wages. 

The shortage of competent American labor is not simply a war 
shortage. A considerable portion of our skilled labor supply has 
always come from Europe, and a relative decline in the emigration 
of skilled laborers to America has been the mainspring of our interest 
in industrial education in recent years'. Everyone familiar with the 
labor market has known likewise that the Italian and Slavic immi- 
grants from southeastern Europe have furnished us with our princi- 
pal supply of common laborers during the past two generations, and 
that American common laborers have been, on the whole, of declining 

The shortage is no new one. But Europe has heretofore protected 
us against the pressure of our lack. The war, with its stoppage of 
immigration, contemporaneous with a sharp increase in the demand 
for American products, raw and manufactured, suddenly made the 
shortage acute. It twisted the tourniquet. We suddenly became 
conscious that we were no more independent of Europe's birth rate 
than we were of her dyes. We need labor now. After the war, when 
millions of Europeans will have died in arms or been crippled in 
action, will immigration relieve our shortage again ? If it would, is 



it sane public policy to permit conditions to continue which destroy 
the efficiency of hundreds of thousands of men, simply because we 
can find others to take their places? Will a nation that is willing, 
if necessary, to lay down the lives of millions of men and billions of 
treasure to ''make the world safe for democracy" allow social ar- 
rangements to continue which condemn whole armies of men to 
economic inefficiency and moral deterioration? 

One of the principal reasons why uncounted thousands of American 
laborers are of such low quality that employers do not "want to 
give them standing room," and prefer the immigrants, is a disor- 
ganized labor market. Erroneous labor policies stimulate labor turn- 
over and labor migration and result in a progressive deterioration of 
the laborer. We educate them for inefficiency instead of efficiency, 
and train them in shifting instead of in sticking ; we discourage self- 
respect, encourage thriftlcssness, and compel continuous movement. 
If we had set ourselves to devise ways and means of destroying the 
efficiency of American labor, we could not have chosen methods better 
suited to our purpose than \hi conditions characterizing our present 
labor market. Constant labor turnover and constant labor migration 
will demoralize a working force as rapidly as it can be accomplished. 
I am not ignorant of the fact that many personal causes contribute 
heavily to labor inefficiency. No man can watch the flow of migra- 
tory labor through any distributing point, like Minneapolis, without 
witnessing tragedies of drink, of drugs, of feeble-mlndedness, of bad 
home training, of defective education, and of moral failure that 
wring his heart. But contact with tens of thousands of laborers of 
every type and description has forced the conclusion upon me that 
the moral failure of a very large percentage of these men is the 
result of the industrial and social conditions that surround them 
rather than of initial viciousness on their part. Initial personal fault 
accounts for some of them. But economic conditions beyond their 
control or understanding account for more. They are victims of 
drink, vice, drugs, and women largely because the nature of their 
work prevents a normal home life, normal community life, normal 


You are familiar with common laborers. You see them daily, 
standing on street corners, riding in street cars, sweating in excava- 
tions, loafing at saloon or pool-room doors. You have probably 




hired them at one time or another. You may have shared their life. 
But have you ever really become acquainted with them? Do you 
know where the common laborer comes from, what his experiences 
are, what becomes of him, what his types are? Or is he one of 
those commonplace experiences that you are so familiar with that you 
do not really know anything about him ? You know that there are 
more than a dozen different kinds of machinists, and that different 
kinds of carpenters have different types of skill which bring varying 
rates of pay. Do you realize also that there are at least five distinct 
classes of common laborers, varying in skill, in the kinds of work 
they follow, in productive capacity, in earning power, in social 


I was in a gas-retort house one night in Oshkosh, Wisconsin. It 
was the hour for drawing the coke and recharging the retorts. Three 
stokers opened the little retort doors and drew the red-hot coke 
out on the floor. Then, standing twelve or fifteen feet away from the 
red-hot open retorts they threw from 400 to 600 pounds of coal, with 
scoop shovels, into openings twenty-one inches wide and fourteen 
inches high and filled nine retorts without letting a single piece of 
coal fall on the floor. They were common laborers. They worked 
twelve hours a day and seven days a week. Their job consisted 
simply in drawing coke, cleaning retorts, and shoveling coal into 
the retorts. But they had the skill of men who had thoroughly 
learned a job, who had developed an expert skill in that job, who 
remained steadily on the job. They were a part of that plant. But 
more than that, they were heads of families, citizens of Oshkosh, 
integral parts of the economic, political, and social life of the nation. 

Here is the first and highest type of the common laborer : the 
man who is a part of an industry, who has an occupation, who is a 
citizen in a community, is the father of a family, perhaps a member 
of a lodge, a club, or a church. You find this man by the million in 
our industrial and social life. He runs the bulk of our simpler 
machinery, operates our street cars, furnishes our watchmen, janitors, 
and a thousand other kinds of steady help. Upon his shoulders 
rests a heavy portion of our social fabric. He represents no social 
problem so long as he can maintain this status — except the problem 



of an income inadequate to provide his family with a safe subsist- 
ence and a dependable future. Probably four out of every ten 
workmen are found in this category. 

But this is not the only type of common laborer who is a per- 
manent factor in the life of the community. A second important type 
is the man who works irregularly, who has a continuous succession 
of employers. He works for a while for contractor Jones, then for 
Smith, then for Brown. He gets a temporary job in a factory, then 
in a brickyard, and next in an excavation. At his best he is a man 
with a family — struggling for existence. His wife commonly assists 
in the bitter struggle by keeping boarders, or by doing washing or 
sewing; his children are found at the workbench as early as the 
law allows, and high-school education is not a thing that his family 
can think about. In a somewhat lower variation of the type we find 
this family intermittently on the rolls of the charities, whenever two 
or three weeks of continuous unemployment, a sickness, or other 
slight calamity assails them. In a third variation we find a single 
man living in cheap boarding houses and generally deteriorating 
steadily under the influence of drink and irregular habits. The 
struggle for existence of the married man of this last class is harder, 
more bitter — but he has more to fight for. 

The distinction between this general group of laborers and the one 
first described is found in the relative steadiness of the first group's 
employment and the relative unsteadiness of the second's. One works 
for the same employer for considerable periods of time ; the other 
changes employers frequently. Individuals of the first group frequently 
pass into the second group, when they lose their steady jobs and are 
unable to get others. Individuals of the second group sometimes pass 
into the first group by fortunately dropping into a steady job. 

To some this may seem a flimsy basis for classification. It seems 
somewhat vague, leaving a middle ground, a twilight zone, where a 
considerable number of people lie in either group, or both, or some- 
times in one and sometimes in the other. But it at least has the 
merit of conforming to life, and it calls attention to two types whose 
life experiences differ considerably. The members of the group with 
steady employment are never far from destitution. They are poor, 
very poor. They have a hard time to make ends meet. They com- 
monly have to take their children out of school by the time that they 



are sixteen years of age. A period of unemployment, a bad sickness, 
or other misfortune will quickly bring them to the point where they 
must have help. But ordinarily they are making ends meet. The 
wife or children may have to earn part of the living, but the family 
is self-supporting, and as it looks ahead it sees a prospect of steady 
income and of continuing self-support. It has a certain sense of 
assurance, of confidence, of hope. 

The group which works at a succession of jobs, on the contrary, 
continually hears the wolf's claws scratching on the door. They 
live in constant uncertainty, constant fear. They have no assur- 
ance of continuing income, no solid basis for hope, no opportu- 
nity to get a few dollars in the bank, no justification in starting to 
buy a home. They are living from hand to mouth, and never know 
at what moment the hand may be empty. Their self-respect and 
honesty are alwa\'S under the strain of fear ; their working efficiency 
is deteriorated by a continual change of jobs that makes it im- 
possible for them ever to attain efficiency at any. They are, by 
force of necessity, jacks of all trades and masters of none, and after 
they pass thirty-five and their strength begins to wane, the effects 
of undernourishment and the declining courage that accompanies a 
life of fear all bring a steadily declining efficiency. 

The "professional casual" is a third distinct type of resident la- 
borer. He is a distinctly lower type than either of the others, but 
recruited from their ranks. Every employment office is familiar with 
this type. Any city with three hundred thousand people will have 
perhaps three or four hundred well-known individuals. Some of 
them are steady patrons of the state or municipal offices, some of the 
Salvation Army, some of the charities. Others hang around saloons, 
hotels, settlement houses. Individuals of the type can be found in 
almost every country town and rural community. They are a 
distinct social group. 

At some times, especially in the winter, the employment office finds 
among them laborers and mechanics who ordinarily work steadily 
but who are temporarily unable to get work and are taking odd jobs to 
carry them along. For instance, our office carried a machine oper- 
ator with a wife and family for about four months at odd jobs, until 
he was able to get a steady job. He has now been working steadily 
ever since last September in a machine shop. But these are not 



casual workers. They do not belong to the type. They are doing 
casual work only temporarily, and they neither live the life, nor think 
the thoughts, nor have the point of view of the true casual. 

The casual never seeks more than a day's work. He lives strictly 
to the rule, one day at a time. If you ask him why he does not take 
a steady job, he will tell you that he would like to, but that he hasn't 
money enough to enable him to live until pay day, and no one will 
give him credit. If you offer to advance his board until pay day, he 
will accept your offer and accept the job you offer him, but he will 
not show up on the job, or else will quit at the end of the first day. 
He has acquired a standard or scale of work and life that makes it 
almost impossible for him to restore himself to steady employment. 
He lacks the will power, self-control, ambition, and habits of in- 
dustry which are essential to it. 

The causes which produce the casual are many. A striking number 
of them are young. In general, these seem to be defective — de- 
fective in those mental traits which are the basis of industry and 
ambition, and in the sense of responsibility ; defective in moral stam- 
ina or training and addicted to drugs, drink, and vice ; or defective 
physically and unable to do steady, hard work. Absence of the moral 
ideas and motives which cause most of us to work is probably more 
important in explaining these younger casuals than any other one ex- 
planation. Some of them have families which they make little or 
no effort to support, never working if they can get someone else to 
feed them. Others do not know in the morning where they will lay 
their head at night. They live permanently in the city, but have nu 
residence. Some of them are moral failures, some defectives. 

When we turn to the group of casuals who are older, their explana- 
tion is even more complex. Many are moral failures, mental de- 
fectives, or physical unfits, as already described. Others are the 
residuum of our labor market. Starting out as common laborers 
twenty years before, they were for a time steady workmen; then 
they became subject to irregular employment, either because of in- 
dustrial conditions or because of drink or a taste for traveling. 
Gradually they became more and more irregular in their working and 
life habits and crystallized into casuals living from day to day and 
hand to mouth, without self-respect or ambition. They are almost 
parasites in the body politic. 





Not all common laborers are residents of a community, however. 
Intermingling with the resident laborers we find a multitude of men 
who are continually wandering from place to place — today working 
in a factory in Minneapolis; a month from now on a construction 
job in Des Moines ; later, bobbing up on a dam job in Wisconsin ; 
migrating to the harvest fields in the fall, and then to the woods, to 
construction work, or to some factory job for the winter. These men 
too reveal distinct subgroupings. We find among them temporary 
migrants, skilled migrants, common laborers, and tramps. 

The temporary migrant is found particularly in agriculture and 
contracting. Many farmers, farm hands, and city men, who are 
permanent residents of some community for the bulk of the year, go 
to the harvest fields in the fall. Many carpenters, painters, and other 
classes of mechanics or steady laborers leave town during periods 
when local employment is slack and good opportunities are presented 
elsewhere. This is particularly noticeable now, when so many are 
leaving their permanent homes to work for the government in other 
localities. But most of these men will either return to the towns 
from which they start or else take up a permanent abode in some 
other locality. They do not spend their life in travel. 

The true migrant — the Ishmaelite of modern times — has no 
abode. He lives where he happens to be. If he gives you a so-called 
permanent address, it is the place he left years ago, never to return, 
or else it is fictitious. This type of migrant reveals two distinct 
classes — the skilled migrant and the unskilled. 

We find the skilled man in such types as tile ditchers, cant-hook 
men, farm hands, and steam-shovel engineers. Side by side with them 
are common laborers who work on construction of dams, railroads, 
bridges, in the lumber woods and harvest fields, or wherever large 
gangs of men are assembled from distant places. 

These men have no homes. They have either no families or sev- 
eral families. They live in the camp or the lodging house. Their 
pleasure is found in the saloon and its accompaniments, in the pool 
room or the movie, or in the rough jokes of the camp. When in 
town they are the prey of the saloon, the " hook shop," the second- 
hand store, the employment agency, the municipal police court, the 
lodging-house thief, the pickpocket. On the job they are ordi- 
narily parts of a gang, who are "hands" in the eyes of foremen and 



employer. In camp their lot is often little better. I have known cases 
where men have worked a month and have been in debt to their 
employer at the end for employment fees, post-office fees, board, 
hospital fees, and transportation. 

When I was a child I was much interested to learn that the Ara- 
bian Bedouins, wandering over the desert, travel certain routes year 
after year by which they pass through certain oases at certain times. 
Tens of thousands of these camp workers follow a similar trail — 
passing from industry to industry and locality to locality in a more 
or less regular path of migration. As the seasons pass they move from 
contracting to harvest to lumber woods to railroad work, and often 
insist on going to certain definite localities at each season. 

I am trying to make clear that we have in America several hun- 
dred thousand, probably more than half a million men, who have no 
homes, who are residents of no community, who are parts of no 
particular industry, whose contact with the life of our nation con- 
sists in contact with cheap lodging houses, private employment 
agencies, second-hand stores, and pawnshops; vicious women, sa- 
loons, and municipal police courts ; industrial camps, where the 
minimum of decency and cleanliness is maintained ; the brake beams 
of the freight car; and a total absence of any home, church, or 
community life. 

These Ishmaelites of the twentieth century are one of the by- 
products of our economic system. The exploitation of a continent's 
natural resources, the single-crop system of agriculture, the alterna- 
tions of industry due to the seasons, the fact that in a new country 
labor has to be attracted to new points in the process of developing 
new enterprises, have been the economic bases of a labor-distribution 
system in which labor has been shifted here and there to meet the 
demands and needs of capital and land. We have forgotten that 
while labor may be a commodity, laborers are not. We have met the 
needs of industry without protecting the personalities of laborers. 
We have developed our resources while spoiling citizens. Hundreds 
of thousands of men for whom no individual industries, no commu- 
nity, no particular group of socially visioned people have felt them- 
selves responsible have been steadily deteriorated and ruined by a 
life of migration and irresponsibility. 






We will now trace the relation of the employment system in 
America to the labor types. We are very charitable in speaking of 
it as a system, for it is precisely the absence of any system of distrib- 
uting labor which is the outstanding characteristic of the situation. 
We have, in all centers where laborers congregate, commercial 
agencies which make a business of selling jobs to laborers for a fee. 
We haxe state and municipal offices in nearly half of the states, but in 
most cases each local office works individually and without any cor- 
relation with other public offices in the same state. The federal 
government has had an extremely crude employment system in the 
post offices, and has made a weak attempt at federal-state cooperative 
offices in the Immigration Bureau. Both of these experiments were 
failures, and the federal government is now attempting to develop 
a real organization of the labor market through the Department of 
Labor. Little practical progress has been made, and no genuine 
success will be achieved until the nation more fully recognizes some 
of the fundamental facts in the situation with which it is seeking 
to cope. 

The essence of our industrial policy with respect to labor has been 
continuous turnover. In ever>' industry, though not in every individ- 
ual establishment, our employers have followed a policy of hiring 
and firing. If a man did not happen to make good at a particular 
task, he was discharged and someone else hired, instead of being 
transferred to some other task better adapted to his qualities. Fore- 
men have considered the power of discharge as their one unfailing 
method of discipline. Discharge has been in industry what spanking 
used to be in the home and the schoolhouse. In each case it has 
been the means by which those too lazy to think of better ways of 
proceeding have dealt with the weak in their power. Excessive 
discharge in industry has been as disastrous in its effects on the 
industrial and social efficiency of labor as excessive whipping on the 
soul of a child. It has weakened the worker's self-respect, decreased 
his self-reliance, and encouraged subservience. The continual change 
of jobs has prevented the worker from ever learning any job well 
and has destroyed all interest in his work. 

The losses are equally disastrous from the employer's point of view. 



It takes the time of foremen and bookkeepers to hire and fire, and 
the time of foremen to instruct the new hand ; fellow employees and 
machinery are slowed down while he learns his job, and breakage 
and waste are increased. Millions of dollars are lost to employers 
every year by the slowing down of their plants and wastage of time 
and materials caused by excessive labor turnover. 

There are certain principles which I believe must be recognized 
in order to reduce the social losses that I have been pointing out. 
We must have a system of employment offices, national in scope and 
monopolizing the whole employment business, which will be so care- 
fully worked out that every worker can be placed in the nearest 
job that he is able to fill and will have access to every job open to a 
particular capacity. Our system must be able to keep every work- 
man employed with the maximum steadiness ; must be able to sift 
and classify the laborers, so that individuals who have a tendency to 
degenerate into casuals may be spotted and if possible held to 
steady employment ; and must be able to sift out and furnish em- 
ployers with the kind of men they want. It must dovetail the indus- 
tries of each locality so as to use every man in the locality as 
steadily as possible in that locality. ^ 

To accomplish these manifold purposes we must have a national 
system of employment offices, with branches in every locality and a 
central clearing house. Within this national system must be zones, 
or districts, with clearing houses for each district ; and within the 
districts must be subdistricts with their own clearing houses. If a 
local office in a subdistrict could not fill an order, it would tele- 
phone the order to its clearing house, which would seek to obtain a 
man from some other local office in the subdistrict. If the demand 
could not be filled in the subdistrict, it would be transferred by the 
subdistrict clearing house to the district clearing house, which would 
seek a man in the district. Similarly, if the district could not fill 
the order, it would clear the demand through the national clearing 

house. , . , . 1 1 

This clearing-house system, if it were combined with a monopoly 
of the labor market, would enable the public employment offices to 
check labor migration by always finding the nearest man who was 
competent to fill the position. We should not then have men eaving 
Chicago to fill jobs in St. Louis at the same time that men are leaving 



St. Louis to fill the same kind of jobs in Chicago. The pressure 
would be put on men to make them remain where they are, instead 
of to cause them to move. Within a big labor market like New 
York or Chicago tens of thousands of jobs would be filled annually 
by local men which are now filled by outsiders ; tens of thousands of 
men kept at home who are now emigrating to other localities. 

The effect which such a system of offices might have upon labor 
turnover is even more important. That portion of the labor force 
which is most frequently changing jobs would soon be recorded in 
the files of the employment offices. A glance at a workman's card 
would show his history — whether he was a casual, an irregular 
laborer, or normally a steady man. It would show the kind of work 
he has followed. Any local office desiring further information con- 
cerning a certain man could quickly get it by telephoning or tele- 
graphing other offices in which he was registered. The sifting of 
men and their individual treatment would become a practical possi- 
bility instead of a theoretical ideal. The offices could use pressure 
to hold a man steady. 

The record of employers would be equally useful. Those plants 
which revealed excessive turnover could be easily sifted out, and 
the matter brought to the attention of their managers. By personal 
interview, bulletins, and correspondence the offices could call to the 
employers' attention the causes of excessive turnover, its cost, and 
its treatment. The criticism of workmen against individual firms 
could be brought to the employer and the faults corrected. 

To illustrate: A certain firm in Minnesota has been employing 
200 or 300 men in a construction camp for about two years. They 
have a good camp, with steam heat, iron beds, good wash rooms, and 
other conveniences. The firm provides good food. The foremen do 
not drive the men. The wages are high. Nevertheless an excessive 
turnover of labor continued. The public employment bureau deter- 
mined to find the cause. Upon investigation, man after man re- 
ported that the company was providing good food, but poor cooks 
were spoiling it. The company, for their part, showed that they 
were paying high wages to their cooks. But they were not getting 
the service. Correction of the difficulty quickly cut the turnover. 
In two similar cases it was found that a brutal foreman was the 
cause of frequent quitting ; in another, wages had fallen below the 



market rate. An office in continuous touch with the employers and 
men of a given labor market develops a surprisingly intimate 
knowledge of the conditions in the several establishments. 

But most important of all the advantages are two— that the 
market for labor would be centralized and that those in charge would 
be interested in serving the needs of the employer and the employee 
rather than in personal profit. Centralization in the labor market has 
the same advantage that centralization in any market has. The buyer 
and seller have the maximum opportunity of getting in contact with 
someone with whom they can do business. At present, with a large 
number of unrelated employment offices operating in the same town, 
—state, federal, commercial, philanthropic, trade-union, and the 
rest,— the employer who wants a certain kind of man frequently 
places his order in one office while the employee who seeks that kind 
of work files his application in another. The two fail to meet. 
With a single coordinated system of offices the two will come to- 
gether in every instance. 

An employment system run for profit will never give either our 
industries, our workers, or the nation sound service. The profits 
of the employment agent come at so much per head. The more 
heads, the more dollars. The greater the turnover, the larger the 
profits. The interests of the employer demand a small turnover. 
The interests of the laborer demand a steady job. The interests of 
the employment agent are exactly opposite ; the more men he sends 
out, the greater the number of fees. Private agencies are daily 
shipping men by the thousands who they know will not stick. Fre- 
quently they know that the man's real intention is to jump the job 
he is sent to and go to some near-by work. But what 's the differ- 
ence ? Large turnover means large fees, and large fees are the object. 
The state and municipal offices as heretofore managed in this coun- 
try have in most cases (not in all) developed a similar motive favor- 
ing turnover. In their case it is unconscious. They measure their 
efficiency by the cost per head to the state of the men sent out. 
They brag that it has cost the state but 30, or 25, or 19 cents per 
man sent out, as compared with the $2 fee collected from workmen 
by the private agencies. Since most of the state and municipal 
agencies have a set budget, say $5000 or Sio,ooo per year, approxi- 
mately, all of which they spend, their average cost is lowered m 



proportion to the number of men sent out while spending the appro- 
priation. The larger the business, the smaller the average cost per 
job filled, and the better the showing. The natural result is an 
emphasis on the number of men sent out rather than on the quality 
of service rendered. Instead of studying their local market, to 
develop policies that will give the local workers the maximum con- 
tinuity of employment and local employers the steadiest possible 
labor force, their effort has been concentrated upon getting orders 
for jobs vacated and men to fill them. They have made no effective 
effort to decrease labor turnover, and if they do, they will impair 
their showing before their legislative bodies by running up a higher 
per-capita cost for placement. Cheapness rather than quality has 
been the criterion thus far applied to their service. And it is the 
criterion that will continue to be applied until we establish a com- 
prehensive system of employment offices, in charge of men who under- 
stand the employment problem and are technical experts in dealing 
with it, and who are independent of the annual and biennial criticism 
of local legislative bodies not conversant with the problems being 
worked out. It is only under such conditions that the employment 
organization can attack and solve the vital problem of our labor 


I have emphasized two points as fundamental to a successful or- 
ganization of the labor market : first, a consolidation of all public 
employment agencies into a single system under the auspices of the 
federal government, with subdistricts and clearing houses just as we 
have in the Federal Reserve banking system ; and, second, a mo- 
nopoly of the labor market, so far as employment-agency work is 
concerned, by this federal employment system. A further word on 
these two points is now necessary. 

The country had no lack of employment agencies when the war 
broke out ; it has none now. The only trouble is that they are not 
of much use. The postmasters were acting as employment agents. 
The Federal Immigration Bureau was also running a system of em- 
ployment offices. This is now discontinued, and a new set of federal 
offices, under an employment chief of the Department of Labor, 
is in process of establishment. More than one half of the states 



had state employment offices. Many municipalities had employ- 
ment offices. The Y. M.C.A. and Y. W. C. A., charity societies, 
commercial associations, settlement houses, the Salvation Army, and 
other semipublic or charitable organizations were running a host of 
agencies, more or less defiled with the taint of charity. Thousands 
of private profit-getting agencies v*^ere in operation in all of the 

labor centers. 

The number of employment agencies in the country ran into the 
thousands, probably the ten thousands. But each was a distinct 
unit. The postmasters had no effective system of cooperating with 
each other and made no attempt to cooperate with the immigration- 
bureau offices. The various immigration offices were distinctly local 
and had no system of cooperating with one another. They had no 
clearing houses. They were in no effective cooperation with state 
offices except in half a dozen cities. The state offices of each state 
were, as a rule, run as local offices and without any centralized 
management of the state labor market. The philanthropic agencies 
cooperated neither among themselves nor with the public offices. 
Decentralization, disorganization was — and is — the keynote of the 


The first essential step now is legislation that will weld all of the 
existing state and municipal offices into a federal system, centralized, 
coordinated, systematically managed, and controlled by big, far- 
seeing policies. The same legislation should eliminate forever the 
private commercial agency, which has cursed our economic system 
far too long. Monopoly is essential in order to insure that all orders 
for men and applications for work shall be brought to the same office, 
so that buyer and seller may have their needs met with maximum 
rapidity and efficiency. It is likewise essential to check turnover 
and migration. Philanthropic agencies, operated without profit to 
their owners, might be permitted to continue if operated in close 
cooperation with the public system. But practically all of them 
would go out of business as soon as a proper organization of the 
market was established. 

The plans suggested are not theoretical. England has for years 
been operating a system of employment offices not materially dif- 
ferent from the plan suggested. Ohio is today operating a system 
of twenty-two offices on similar principles. A clearing house for 




public noncommercial employment agencies is now clearing for 
over seventy agencies in New York City. Many able men in this 
country are already sufficiently experienced in employment-office 
management and sufficiently conversant with the problems to be 
solved to undertake the installation of an American system that 
will be an ideal for the world. 

The war has revealed how acute is the need. The time is ripe. An 
aroused public should demand a termination of the suicidal labor 
policies which have been ruining the efficiency of American labor. 

Don D. Lescohier 

Unwersity of Wisconsin 

•s t 




MR. TAYLOR . . . T he development of a code of law s, of a 
science to replace the oldrule-of- thumb knowledge,— recording 
it and reducingirfo-t2rwv=^lslErSHt^ of scjentific manage- 

ment. Second, the scientific "selectionoTthe workman and his train- 
ingT Third, the bringing of the science and the trained workman 
together. And fourth, some scheme, joint effort, to make it worth 
WEiTTfor the workmen to work according to the new .'scheme. Pig- 
iroh"liandling is the cheapest form of labor known. . . . Probably 
the most important element in the science of shoveling is this: 
There must be some shovel load at which a first-class shoveler 
will do his biggest day's work. What is that load? To illus- 
trate: Right back of the office of the Bethlehem steel works, there 
was a train of rice coal being pushed in and the right kind of 
fellows at the shovels. No fellows could work better than they 
worked. But we saw first-class shovelers go from shoveling rice 
coal with a load of 3^4 pounds to the shovel to handling ore from 
the Messaba Range with 38 pounds to the shovel— 3^4 to 38 
pounds. Now it don't take much science to see that they can't both 
be right. Now, what is the proper load for a man to take on a 
shovel ? It was up to us to make a scientific investigation of shovel- 
ing. This lasted more than a year of constant study and work. In 
making that investigation a number of men were busy at it all the 
time— high-class men, men who were very much in earnest. Here's 
a sample of the way to go at it. There is nothing too small for a 
careful, thorough study. What we did was to call in two big, powerful 
shovelers. Let me point out, gentlemen, some people would say, why 

iFrom publication of the Milwaukee Federation of Labor, 1914. Discussion 
by Frederick W. Taylor and N. P. Alifas, representing Metal Trades Depart- 
ment of the American Federation of Labor. 








didn't you pick out some weak ones ? Because we have common 
sense ; because we propose to get the right man doing the right work. 
Well, we called in two powerful shovelers. That's one of the char- 
lacteristics of scientific management. First-class men for the job. 
These men were then talked to in about this way : " Now, Pat, you 
are going to be asked to do a whole lot of fool things. A young fel- 
low is going to write down all of the things you are doing. What we 
are after is certain facts. What we want you to do is to work just 
the way you are told to work. If you do that, — and we know you 
think it will be a disagreeable thing, — we are going to pay you 
double wages while you are doing it. Whatever he says goes. He 
looks like a fool, but don't you get it through your head he is a damn 
fool. You try to soldier on him and you will never come back here 
again. I want each of you fellows to work so as to go home properly 
tired but not overstrained. There is going to be no more soldiering 
and you have got to be just as careful not to do too much as not to 
do too little. Why ? Because we want our men to do something that 
they can do throughout their lives without hurting themselves." 
Why ? Because this whole scheme depends on getting the maximum 
output. You have got to do a good, proper day's work, but there is 
no such thing as nigger driving under scientific management. . . . 
You put a man to shovel a load and give him on his first trial a 
big shovel, shoveling all day long. The number of shovelfuls, 38 
pounds on the shovel, were counted. We then cut the shovel off so 
that it held about 34 pounds. He shoveled more stuff with the 34- 
pound load. W^ith a 3c>-pound load he shoveled still more tons per 
day. A 21 -pound load was the maximum. With the 18-pound load 
he shoveled less. That is, the powerful workman, well suited to his 
job, did the biggest day's work with this 21-pound shovel. How far- 
reaching is that law ? Under the old system every fellow owned his 
own shovel. Every man went at it each day as he saw fit, and the 
shovel was the same size, whatever the kind of work. Now, as a 
matter of common sense, we saw at once that it was necessary to fur- 
nish each workman each day with a shovel which would hold just 
21 pounds of the particular material which he was called upon to 
shovel. That meant that where a man was handling great big gangs 
before, now we had to handle each man by himself. Each man had 
to be studied as a man and find out what he was fitted for. We had 



to study each man's work every day. ... We had to have men 
teachers appointed to show those men how to shovel and how to shovel 
right, to teach them how to shovel. We had to have men figure up each 
night just what every man of that gang did the day before. The first 
thing each workman did when he came into the yard in the morning— 
and I may say that a good many of them could not read or write— 
was to take two pieces of paper out of his pigeonhole. One of those 
slips of paper informed the man in charge of the tool room what im- 
plement the workman was to use on his first job and also in what 
part of the yard he was to work. The second one was a white or 
yellow slip of paper. It told what they earned yesterday— how they 
fell down. If it was a yellow slip of paper they knew they had fallen 
down. If that happened three or four days they would hear from 
it. The old way of treating a man would be to say to him, " Pat, you 
are no good, now get out of this." Now let me show you what hap- 
pens. Generally the man was sent down to him that taught him how 
to shovel. "Here, Jim, you have got four or five of those yellow 
slips. Have you been drunk, or are you sick ? Because if you are sick 
we will give you a show somewhere else for a while, while you are 
getting better. Have you forgotten how to shovel ? Go ahead and 
shovel and I will see what's the matter with you." 

Now that teacher knows all about the art of shoveling, and he 

not only knows how to shovel but he knows how to show another 

fellow how to shovel. Now he says to that workman: "Go ahead 

and shovel." He finds almost every time that the fellow forgot how 

to shovel. Now, gentlemen, I dare say some of you have done some 

shoveling, but whether you have or not, I am going to try to show 

you something about the science of shoveling. There is a good deal 

of refractory stuff to shovel around a steel works; take ore, or 

ordinary bituminous coal, for instance. It takes a good deal of effort 

to force the shovel down into either of these materials from the top 

of the pile, as you have to when you are unloading a car. There is one 

right way of forcing the shovel into materials ot this sort and many 

wrong ways. Now the right way is to press the forearm hard 

against the upper part of the right leg just below the thigh, take the 

end of the shovel in your right hand and when you push the shovel 

into the pile, instead of using the muscular effort of your arms, which 

is tiresome, throw the weight of your body on the shovel. That 




pushes your shovel in the pile with hardly any exertion and without 
tiring the arms in the least. Teaching a man how to shovel requires 
the same sort of coaching as there is in baseball. Then there are 
lots of other elements in shoveling, the shape of the shovel, etc. 
Now the new idea that comes under scientific management is that if 
that man isn't shoveling right it's our fault, because we haven't 
taught him right. It's not his fault. We don't go down there blam- 
ing him. It's up to us. We have failed somewhere. The proba- 
bility is, it's the management's fault. All that costs a whole lot of 
money. The question is. Does it pay? No scheme which doesn't 
pay for itself as it goes along can be worth anything. It won't persist. 
A very proper question is. Does this thing pay ? If it doesn't pay, it 's 
no good. At the end of three years we had a good chance to find out. 
There were several million tons of material handled in the Bethlehem 
Steel Company in the course of a year. Under the old system it 
cost between 7 and 8 cents to shovel a ton. Now, after paying for 
all the clerical work which was necessary under the new system, 
for the teachers, for building and running the labor office, and then 
paying the men 60 per cent higher wages than they got before, the 
cost of shoveling a ton was reduced from between 7 and 8 cents under 
the old system to between 3 and 4 cents under the new system. In 
addition to that, the saving during the last six months of that three 
and one-half years was at the rate of $78,000 a year. And the 
workmen there got justice, there was friendship in place of enmity. 
I had them look up those men, and they were all happier and 
better off. That is the justification of scientific management. You 
have got to have that every time, or else scientific management 
doesn't exist. 

Mr. Alifas ... In regard to our objections to the system, I 
might start in by telling you what we consider its possibilities. These 
possibilities are the main objections we have to the system. 

If it is a fact that workmen are loafers as a general thing unless 
somebody gets behind them with a whip to spur them on, and the 
employer is to blame for that, why of course he will take that blame 
very kindly, due to the fact that he thinks he hasn't got behind them 
strong enough. There are a great many forms of stimuli added to the 
stimulus that is ordinarily used. As to the machinists, those that are 
organized, they don't favor any system that gives them any more 



stimulus tlian the stimulus that is ordinarily in vogue under day- 
work. They find that the fear of discharge and the supervision of 
the foreman, and the desire of the men to retain the good will of 
their employers, are sufficient for all purposes to make them do a 
desirable day's work. . . . 

One of the first stimuli that has been added is the premium system. 
And of course it is well recognized that if a man, in addition to the 
fear of discharge and the fact that he has to do a good day's work, 
is induced to speed up by means of being offered a reward, it will 
stimulate his movement just that much faster. 

A great deal has been said here in regard to the very unsatisfac- 
tory method of getting prices finally set by means of piecework. It 
appears that the employer can't resist the temptation to cut prices if 
a man makes more than he thinks he ought to make. The inference 
seems to be that the employer loses that notion once he tries scientific 
management. As we look at it, it resolves itself down to this : Piece- 
work is paid on a basis that is more like guesswork. If an em- 
ployer has found out just what the least time is that a man can do a 
job under the premium system with a time-study method of ascer- 
taining the time, he arrives at that time in the first place, so that he 
doesn't have to reduce the man in order to get him down to the very 
highest speed and lowest wages. An employee under piecework 
would at least be having the advantage of not having to work quite 
so hard and getting better wages while the cutting was going on. 
Of course, if they continued piecework long enough, they would 
eventually get down to the basis where an employee could just about 
make what the employer thinks he ought to make. 

It is advocated that once the system gets started, they should 
add another stimulus to the premium. That is, they would start a 
system — thfr^differenti^ piecework system, that consists of ascer- 
taining what the maximum amount of work a man can do in a day is, 
and when they find that, then offer him a piece price in addition to 
a bonus. An illustration has been given : Say a man could make ten 
pieces in a day. He would get 35 cents a piece for those. If he 
makes nine and three-fourths in a day, he would get only 25 cents 
a piece for them. That would furnish a man with a powerful in- 
centive to speed up abnormally. That is an incentive that is much 
higher than even the premium system or the piecework system. It 


5 it 



would be clear to you just why the premium system is a system that 
contains more stimulus than the piecework system. Under the 
premium system, as it is in vogue at the Watertown arsenal, if it has 
been discovered, say, that the least possible time in which a job of 
one hundred pieces could be done is forty minutes, they add 40 per 
cent to that and say if a man can do that inside of an hour he shall 
get paid, say, one half a cent or half of his rate for every minute that 
he saves under that. He would be getting 40 cents for doing that 
hundred pieces instead of 30 cents. The faster he does the job, the 
more money he gets for the job. 

Now another stimulus that they propose is that if a foreman is 
given a premium in proportion to the number of men under him 
that are making a premium, he will have a greater interest in 
getting them to do more work. Of course he will. If a foreman is 
going to lose money every time one of his men fails to make his pre- 
miums, he is going to get after that man. It isn't going to be a ques- 
tion of investigating to learn just why the man couldn't do a day's 
work and endeavor by coaxing and persuasion to get him to do it, 
but by something more forcible than that. 

Now there is the question of the amount of premium that a man 
shall get. According to the way this question was explained by 
Mr. Taylor in his work, the amount of premium is regulated by what 
they can get the men to exert themselves for ; that is, if by a series 
of experiments it was found that if they paid 15 per cent premium, 
the men would not do the work. If they paid 45 per cent pre- 
mium, they would do the work, but it might not be necessary to pay 
that much. They finally get to 30 per cent we will say. So that 
the premium is not an amount that is given gratuitously in any sense 
of the word. If the labor market should become glutted, it would be- 
come quite possible that the premium would be lowered either by 
reducing the day rate or by lowering the premium, so that that is a 
matter that is decided according to experiment and law— this kind 
of laws. 

It has also been ascertained just how much a man can do in a day 
by experimenting with his strength ; that is, by a load of, say, fifty 
pounds. If a man would rest a certain portion of time in a day, 
he would carry so much. By the system of experimenting with a 
good strong man they could find out just what the maximum amount 

it i 

%4 ■ 



of the load was he could carry in a day. The idea would be to set that 
as a day's work. In regard to wages, the amount of wages would be 
set by what they could get the man to work for, by the law of supply 
and demand. 

We have figured out that if we are going to be reduced to a scientific 
formula, so to speak, we are going to object that it is not to our 
benefit to be thus experimented with. . . . We also protest against 
it because apparently there is no place in scientific management for 
collective bargaining, at least according to the statement of these 
gentlemen some years ago. In this work written by Mr. Taylor, in 
paragraphs Nos. 425 and 426 of his "Shop Management," 

The writer believes one way of regulating the wages and condition 
of employment of whole classes of men by conference and agreement 
between the leaders of unions and manufacturers to be vastly infe- 
rior, both in its moral effect on the men and on the material interests 
of both parties, to the plan of stimulating each workman's ambition by 
paying him according to his individual worth, and without limiting 
him to the rate of work or pay of the average of his class. 

The amount of work which a man should do in a day, what con- 
stitutes proper pay for his work, and the maximum number of hours 
per day which a man should work together form the most important 
elements which are discussed between workmen and their employers. 
The writer has attempted to show that these matters can be much 
better determined by the expert time student than by either the 
union or a board of directors, and he firmly believes that in the 
future scientific time-study will establish standards which will be 
accepted as fair by both sides. 

That is an indication to our minds that there is really no place in 
scientific management for two people's opinions. 

It has been stated that there is no opposition. As far as we can 
ascertain from the workingman's point of view, there is nothing but 
opposition to this system. We have been opposing it for a long time. 
... It has been stated that these systems provide for higher rates 
of pay for workmen. That is not literally true, according to the 
testimony of these gentlemen. In paragraph No. 37 of this book on 
"Shop Management" 

By high wages he means wages which are high only with relation 
to the average of the class to which the man belongs and which are 
paid only to those who do much more or better work than the average 



of their class. He would not for an instant advocate the use of 
a high-priced tradesman to do the work which could be done by a 
trained laborer or a lower-priced man. 

The idea seems to be that the systematizing which is part of the 
Taylor system will so simplify the work that where they had to have 
a high-priced man before the system was introduced, afterwards they 
could get along with a cheaper man. While the cheap man would 
get a premium or a bonus for speeding up, he doesn't receive as mi^ch 
as the man whom he displaces would be getting. That's the ideal 
condition, according to what they advocate. That condition may not 
have been achieved anywhere, but that is possibly due to the inability 
of the managements to get the most out of the system that it is 
possible to get out of it. That hasn't much to do with their inten- 
tions, as we look at it. Their intentions are to get the most out of 
the men for the least money. It 's the same as employers have ever 
done. . . . This system may look to some people as a great boon. 
It looks to the working people as the beginning of a new slavery, if 
it is possible to enforce it, where we will have no opportunity to get 
any satisfaction from our complaints. What satisfaction would a 
workman get who went to the office and complained against the in- 
justice of a stack of books like that ? He would not get any 
consideration at all. 

We can't see that this system has the ingenuity to change em- 
ployers' sentiments. 

Some people may wonder why we should object to a time study. 
In the first place it is humiliating for a man to be suspected of 
soldiering and loafing. One way is to hold a stop watch on him, so 
that he doesn't cheat. That's not the principal objection. The ob- 
jection is that in the past one of the means by which an employee has 
been able to keep his head above water and prevent being oppressed 
by the employer has been that the employer didn't know just exactly 
what the employee could do. The only way that the workman has 
been able to retain time enough in which to do the work with the 
speed with which he thinks he ought to do it, has been to keep 
the employer somewhat in ignorance of exactly the time needed. The 
people of the United States have a right to say we want to work only 
so fast. We don't want to work as fast as we are able to. We want 
to work as fast as we think it's comfortable for us to work. We 



haven't come into existence for the purpose of seeing how great a 
task we can perform through a lifetime. We are trying to regulate 
our work so as to make it an auxiliary to our lives and be benefited 


Most people walk to work in the morning, if it isn't too far. If 
somebody should discover that they could run to work in one third 
the time, they might have no objection to have that fact ascertained, 
but if the man who ascertained it had the power to make them run, 
they might object to having him find it out. 





^ I 



THE typical handicraftsman of the Middle Ages pursued the same 
trade all his life, with the exception of the Wanderjahr, in the 
same town. The Industrial Revolution has increased the mobility of 
labor in at least four different ways: (fy Jn ^^e movement between 
countries. Individual migration as opposed to group migration has 
been the characteristic since the Industrial Revolution. The growth 
of America, Canada, and Australia during the nineteenth century was 
made possible largely by the development of steam power. {2)^ In 
the movement between different sections of the same country. The 
AmPficarTorioday does not stay predominantly in the place of his 
birth. He moves about from place to place. The Russell Sage 
Foundation found that of 22,000 men investigated in seventy -eight 
cities, only 16 per cent had been born in the city in which they 
were then living.- Of native-born Americans only one quarter were 
living in the city of their birth. (3) In_th£j^pid_chang£_-at resi- 
dence in any given locality. The modern worker, while in a town, 
rarely lives long Tri any one apartment or house. He moves almost 
unceasingly. (4) In the frequent changing of positions. The work- 
man may leave one plant to enter either another^plant in the same 
industry or one in a totally different industry.^ Recent studies have 
shown how transitory the modern wage relation is and how tem- 
porary is the occupancy of any particular position. 

It is the purpose of this article to consider solely this rapid flux 
from position to position, and to examine its nature, its extent, its 
cost, and its causes and remedies. 

iprom American Economic Review, Vol. VIII (1918), pp. 306-316; Vol. IX 
(1919), pp. 402-405. 

2L. P. Ayres, Some Conditions Affecting Problems of Industrial Education 
in Seventy-Eight American School Systems, p. 7. 

3 See Paul de Rousier's "The Labor Question in Britain," pp. 288 ff. 



Thej£miJJabQr turnoYfirlLhaSL been give n to this rapid change 
from position to position. The size of the labor turnover depends 
uponthe ^oportion tha t the total number of employees hired during 
a year bears to the size of the labor force that must be maintained. 
To illustrate : a plant which employs 1000 men at the beginning and 
end of a given year hires during that year another thousand. That 
means that as many men have been newly hired as were employed at 
the beginning of the year and that 2000 men have been employed 
during the year to fill 1000 jobs. This is an excess of 1000 men over 
what would have been needed had the original . force stayed through 
the year, and is reckoned as a 100 per cent labor turnover. Had only 
500 new men been hired during the year, the turnover would have 
been 50 per cent ; had 2000 men been hired it would have been 
200 per cent. 


The recent discovery of the extent and costs of labor turnover has 
brought with it varying methods of computation. In order that a 
standard practice might be adopted, the National Association of 
Employment Managers at their annual meeting in May, 19 18, 
adopted the following method,^ which has since been approved by 
the United States Bureau of Labor Statistics as the basis for its inves- 
tigations:^ " To conipute the percentage of labor turnover for any 
period, find the total separations for tHeTperToB considered and divide 
bythe average of the number act ually working each d ay through the 
p eriod.'' 

1 For a full statement of this report see U. S. Bureau of Labor Statistics, 
Monthly Review, Vol. VI, No. 6 (1918), pp. 172-173. That this method did not 
introduce uniformity may be seen from the symposium on labor turnover in 
Industrial Management, September, 1918, pp. 239-246, and November, pp. 425- 
426, in which from five to six different methods were advanced, practically all 
of which, in the opinion of the author, are wrong. 

2 See Boris Emmet, "Labor Turnover in Cleveland and Detroit," U.S. 
Bureau of Labor Statistics, Monthly Labor Review, Vol. VIII, No. i (1919), 
pp. 11-30; Paul F. Brissenden, "Labor Turnover in the San Francisco Bay 
Region," U. S. Bureau of Labor Statistics, Monthly Labor Review, Vol. VIII, 
No. 2 (i9i9)> PP- 45-62. 




Before criticizing this method it is necessary to determine just 
what is meant by "turnover." Labor turnover is simply the number 
of men hired by a given business unit to take the places of men 
who have left. Turnover in this sense is exactly similar to the use 
of the term by any retail merchant to indicate the disposal of 
certain units and their replacement by other units.^ Turnover as 
such does not begin until replacement occurs. 

The percentage of labor turnover is the proportion which these 
newly hired men who actually replace others form of the average 
force employed in a given period of time. It indicates the percentage 
of men which it has been necessary to hire in order to maintain a 
constant labor force. In itself it indicates nothing as to whether the 
force itself is being increased or decreased. 

In the light of this definition (which I believe would be ap- 
proved by every student of the problem), the method of computa- 
tion adopted by the Bureau of Labor Statistics is defective in the 
following ways: 

I. It uses^sfpa rat ions rather than replacements as the basis of 
turnover. The definition of turnover adopted by the Employment 
Managers Association is indeed as follows: "Labor turnover for any 
period consists of the number of separations from service during that 
period. Separations include all quits, discharges, and lay-offs for 
any reason whatsoever." 

It is true that in a period in which the working force of the given 
plant is being increased, separations do roughly constitute the amount 
of turnover which takes place. Men are being hired not only to 
increase the net working force but to take the place of those who 
have left. It is only in the latter sense that they constitute replace- 
ments and enter into turnover. Separations in this case, therefore, 
do approximately measure replacements. To be absolutely accurate, 
however, one should subtract the vacated positions which have not 
been filled from the total separations to secure the number of actual 
replacements. Such a deduction, however, although ideally necessary, 
may not be practically possible in many instances, due to insufficient 
pay-roll data. 

iWith the exception, of course, that a high labor turnover means an eco- 
nomic loss to the employer, while a high turnover of goods means an economic 
gain to the merchant. 


But the case is different if the labor force is decreasing. Suppose 
that a given plant decreases its force in a given period of time from 
looo to 900 and hires no new men. There are 100 separations, but 
no new men have entered the plant. Turnover as such has not oc- 
curred. Yet the method adopted by the Bureau of Labor Statistics 
would show a labor turnover of 100 men. Plainly, therefore, in this 
case separations do not measure replacements. The number of men 
newly hired do constitute replacements. It is not correct, moreover, 
in the case of a declining labor force to deduct the positions vacated 
but not replaced from the number newly hired, since those newly hired 
have replaced some workers even if they have not replaced the 
particular ones whose positions are vacated. 

The proper method, therefore, of determining replacements should 


a. The number of separations actually replaced as the base m 

the case of an increasing force. 

■5. The number newly hired as the base in the case of a de- 
creasing force. 

2. It uses the average attendance as the denominator mstead of 
the number actually_ employed by the company. The best index of 
thr-aV5fage numbeT actually employed is not the average attendance 
but the average number on the pay roU.^ The use of the average 
attendance as the denominator confuses absenteeism with turnover. 
Recent investigations show that from 6 to 1 5 per cent of the work- 
ing force are absent daily. Yet these men fill positions which are 
part of the working force, and consequently should not be disre- 
garded in computing the average working force. Absenteeism should 
be treated as a separate item in labor loss and not included in the 
computation of turnover.- 

iCare should be taken that the pay roll does not contain "dead wood," or 
men who have really left the employ of the company. 

2 Mr Boris Emmet, an investigator for the U.S. Bureau of Labor Statis- 
tics, in his article on the "Nature and Computation of Labor Turnover, Jour- 
nalof Political Economy (February, 1919), PP. 105-117, has come to beheve 
in the use of hirings rather than separations m a decreasmg work force, but 
he ^tiU clings to the use of the average attendance as the denommator. One 
of his objections to the use of the pay roll is that it contams absentees. Of 
course it does, but these can be computed separately and should not be confused 
with turnover. 







The preceding paragraphs indicate the methods which I believe 
should be followed: To compute the percentage of labor turnover 
for any period, find the total replacements for the period considered 
and divide by the average number on the pay roll. 

The difference between the method proposed by the author and 
that adopted by the Bureau of Labor Statistics may be seen from 
the following two nonalgebraic examples : 

Example A. Computation of Labor Turnover with an Increasing 

Labor Force 
I . Given statistics : 

Number employed at beginning of month, looo. 
Number employed at end of month, i loo. 
Number newly hired, 300. 
Number positions vacated not filled, i o. 
Average daily attendance, 900. 
Method of Bureau of Labor Statistics : 

Number of separations = 300 — (i 100 — 1000) = 200. 
Labor turnover = §g^ = 22.2 per cent. 
Method proposed : 

1000 4- 1 100 


Average force on pay roll 

= 1050.1 

Number of replacements = 300 — (i 100 — 1000) — 10 = 190. 
Labor turnover = ^^jYo' or 18.1 per cent. 
Percentage of absenteeism = j\%% = 14.3 per cent. 

A Decreasing 

Example B. Computation of Labor Turnover with 

Labor Force 

1. Given statistics : 

Number on pay roll at beginning of month, 1000. 
Number on pay roll at end of month, 900. 
Number newly hired, 25. 
Average daily attendance, 800. 

2. Method of Bureau of Labor Statistics : 

Number of separations = 25 + (1000 — 900) = 1 25. 
Labor turnover = ^5^, or 15.6 per cent. 

iThat is, the arithmetic average of the number employed at the beginning 
and end of the month. The number each week can be averaged if more accurate 
methods are desired. 


1000 + 900 _ 

- = 950. 

3. Method proposed : 

Average number on pay roll = 

Number of replacements = 25. 

Labor turnover = g^.,%, or 2.6 per cent. 

QCO — 800 o 4. 

Percentage of absenteeism = ^' ^^^ ' or 1 5-8 per cent. 

It will be noticed that the use of this method results in a much 
lower turnover rate, which is especially true in the case of a decreasmg 

labor force. j ,„ , 

The labor turnover for a given period should be reduced to a 
yearly basis in the same fashion that the Public Health Service re- 
duces mortality and morbidity statistics to a yearly rate. If the 
given period is a month, the percentage should be multiplied by 12 ; 
ff a week by =2. Care should be taken (i) that the replacements 
listed should not include former employees newly hired for their 
old positions; (2) that the statistics be compiled for departments 
and trades as well as for the plant as a whole. ' 

It is quite clear that some labor turnover is inevitable. Men 
who die or fall sick or are injured must be replaced. Since the men 
and women in industry are predominantly in those age groups 
where mortality is lowest, it is extremely probable that *« death rate 
does not greatly exceed 10 per 1000, or i per cent Sydenstricker 
and Warren estimate that theAmerican wa^e-earner loses^on^.a.ver- 
age abouUun£.daya^ear-h£Causeof sickness alone.^ On a basis 
^^T^J^Siiigdays during the year, this would be an average loss o 
; per cent of the working time. But a corresponding 3 per cent 
fabor turnover does not necessarily follow, because illness that is 
only of short duration does not occasion replacement. Industrial 
accidents furnish another small source of the labor turnover Non- 
fatal accidents may necessitate a replacement of from : per cent to 
2 per cent. However, taken all together, these causes would not be 
responsible for a turnover of more than 5 or 6 per cent. 

IB S Warren and Edgar Sydenstricker, "Health Insurance its Relation 

to t^e Lrneaith," Pubfic ^^-'^^^'^^.'j-^^::^. 


f ^ l|i' 




No complete survey of the amount of labor turnover in plants 
throughout the country is as yet forthcoming. The Bureau of Labor 
Statistics has been investigating this problem for over two years, 
but the results of their research have not yet been made public! 
Several studies of typical plants in different sections of the country, 
however, afford a bird's-eye view of the actual situation. 

Mr. W. A. Grieves, of the Jeffrey Manufacturing Company, in 
December, 1914, made the first detailed analysis of the extent of 
the labor turnover. Mr. Grieves obtained the employment figures of 
twenty metal plants in the IVIiddle West and found that to maintain 
an average of 44,000 hands during the year they were compelled 
to hire a total of 69,000. The labor turnover for these plants was 
consequently 157 per cent for the year.^ 

Mr. Magnus Alexander, of the General Electric Companv, pub- 
lished a study on this subject in 191 5. After an investigation of the 
employment records for 19 12 of twelve metal-manufacturing plants 
in six states, he found that this group, which employed 37,274 work- 
men at the beginning and 43,971 at the end of the year,' had hired 
during that year 42,571 new employees.- Deducting the net in- 
crease of 6697 in the working force, there were 35,874 replacements 
during that year. Using the number employed at the end of the 
year as a base, this would be a labor turnover of 82 per cent. Sup- 
posing that the increase had been evenly distributed throughout the 
year, and using 40,623 as a base, the turnover for these plants would 
be 88 per cent. 

Mr. Boyd Fisher, after analyzing the employment figures for the 
last year in fifty-seven Detroit plants, found that the average turn- 
over for the group was 252 per cent.^ The Ford Motor Company 
from October, 1912, to October, 1913, hired 54,000 men to maintain 
an average working force of 13,000. This was a labor turnover of 

T^ !^' 4,; ^'■'.^^^S' The Handling of Men (published by the Executives' Club, 
Detroit Chamber of Commerce), p. 3. 

2 Magnus W. Alexander, "Hiring and Firing, the Economic Waste and How 
to Avoid It, American Industries, August, 1Q15, p. 18. 

3 Boyd Fisher, "How to Reduce the Labor Turnover," Annals of the Amer- 
tcan Academy, Vol. LXXI, p. 14. ' . ^^ '^ '»"»<^'^ 



416 per cent for the year.^ The figures from other plants are almost 
equally striking. A large Philadelphia concern had a labor turnover 
of 100 per cent in 191 1.- The turnover of the Plimpton Press was 
186 per cent in 19 12.'' The Pacific Telephone and Telegraph Com- 
pany, of Portland, Oregon, hired 202 new girls in three months to 
maintain an average force of 700. If this is typical of the year, the 
turnover was 115 per cent. Mr. Gregg has stated that the turnover 
of the carding department of a certain cotton mill was over 500 
per cent for one year.* Representatives of the Goodrich Tire and 
Rubber Company have declared that their turnover in former years 
was nearly 200 per cent and that for the last year it has been 

even higher ! ^ 

The turn over for juvenile labor is especial b^Jiigh. The Board of 
Education of Rochester, New York, found that boys between the 
ages of fourteen and sixteen changed their jobs, on the average, every 
seventeen weeks.''^ This is a turnover for juvenile labor of over 
300 per cent. The employment records of Swift and Company of 
Chicago show that the average term of employment for a boy in 
their service was only three and a half months.' This means that 
nearly three boys and a half are employed every year for each 
position or, to be accurate, that there is a labor turnover of 342 
per cent. Figures from Indianapolis, Indiana, show that of 6710 
jobs held by children leaving school 7 per cent were for less than 
two weeks ; 15 per cent for less than a month ; 30 per cent for less 
than two months; and 48 per cent, or practically one half, for 
less than three months.** 

1 Boyd Fisher, " Methods of Reducing the Labor Turnover," U. S. Bureau of 
Labor Statistics, Bulletin No. 227 (191 7). 

2 J. H. Willetts, "Steady Employment," supplement to the Annals, Vol. 

LXV, p. 70. 

3 Jane C. Williams, "The Reduction of the Turnover of the Plimpton Press," 

Annals, Vol. LXXI, p. 80. 

4R. C. Gregg, "A Method of Handling the Problem of Labor Turnover, 

Textile World Journal, April 28, 1917. 

5 John A. Fitch, "Making the Boss Efficient," The Survey, Vol. XXXVIII, 

p. 211. ■Kj \r 

6 Fifty-sixth Annual Report of the Board of Education, Rochester, N.Y., 

p. 142. 

7 National Association of Corporation Schools, April, 1916, p. 13. 

8 Adapted from figures given in Indianapolis Vocational Survey, Bulletin 
No. 21, Vol. I, p. 119. 

i < 






The.i3giires..inr manufacturing indicate, therefore, that the turn- 
Q Ker for this branc h of industry is extremel y hig h. MrT^mest M. 
Hopkins, who has had a great deal of experience as an employment 
manager for several large industrial concerns, has said that a con- 
servative estimate for many industries would be 100 per cent.^ 
Mr. Ethelbert Stewart, who was in charge of the field work for the 
Bureau of Labor Statistics, has stated that some firms have as high 
a turnover as 400 per cent.^ 

The turnover in many branches of agricultural and construction 
work is even greater. Professor Carleton Parker, in a most inter- 
esting study of casual labor on the Pacific coast, cites a dried-fruit 
farm in California that had a monthly turnover of 176 per cent ; a 
construction job in the Sierras, with a normal force of 950 men, which 
had a monthly turnover of 158 per cent; and a ranch with a nine 
weeks' fruit season which had a monthly turnover of 245 per cent.-* 
After a careful investigation he concluded that the average duration 
of a job in certain kinds of work was as follows :* 

Lumber camps i ^.^o 

Construction work i© 

Harvesting y 

Mining 60 

Canning 30 

Orchard work 7-10 


AJiigh labor turnover is not always an economic^wa&te to the 
employer. A plant with many rush orders paying high wages may 
find it to its economic interest l(5~drtve its workmen aQiicF a pace 
that they will be exhausted atjhe end of a few mouths. The old 
group of workmen can then be discharged and a new group employed. 
Many munition factories in the United States followed such a policy 
during the years 1915 and 1916. Though this is of course poor 
economy from the standpoint of social efficiency, and has been so 

1 Proceedings, Third Annual Convention, National Association of Corporation 
Schools, p. 758. 

2 Bureau of Labor Statistics, Bulletin No. 202, p. 8. 

3 Carleton H. Parker, "The California Casual and his Revolt," Quarterly 
Journal of Economics, Vol. XXX (1915), p. 121. *Ibid. p. 122. 



recognized in both England and America under the stress of war, 
yet it may well have been a paying policy for many firms. 

As a rule, however, the employer suffers a very real economic 
loss Trom a high turnover. Although it is impossible to obtain 
exact figures on the cost of the excessive hiring and firing, careful esti- 
mates are fortunately available. The principal items that enter 
into the cost of employing new men are 

1. The clerical cost o f hiring and firing. This includes the time 
of the official (generally the overleerTwEo discharges the old worker 
and employs the new, plus the time spent on the additional pay roll 

and other records. 

2. The cost of the instruction given the new employees by the 
foremen^and^lHe assi'stants. ' Even if "tli'e workman Is experienced, 
^SHiiiiFabirtime must be spent in explaining the details peculiar 
to that particular plant. The cost of training a worker for a skilled 
or semiskilled position is much larger still. 

3. Decreased production by the ^newjyx^cto: .belore coming up to 
full working capacity. It takes time to "warm up" to one's work 
^Tid-T5a^'the maximum of efficiency. Rapid shifting of men per- 
petuates this period of novitiation with its greatly diminished 


4. Breakage and damage cause cl by the new map. This includes 
(a) STe actual "breakage of a machine or tool ; (b) the stoppage of a 
machine, or the delay of work; (c) accidents to the workers, for 
which the employer is liable under workmen's compensation laws ; O^ 
(d) the wasting or destruction of material upon which the new 
worker is employed. 

5. T he cos LoLKJIi^-^^^^'^^^v ^"^ eauipmejiLwhere the old posi- 
tion is notjmmediatel^^ 

flFSsTpiTl^iirnaturally varies with the type of worker. Alex- 
ander classifies the employees under five heads : 

A. Highly skilled mechanics who have spent years in attaining 
their present proficiency. 

B. Mechanics of lesser skill who secured their training in a 

year or two. 

C. Operatives who, without previous experience, can acquire 

a fair degree of efficiency within a few months. 

D. Unskilled laborers needing practically no training. 



E. The clerical force. 

His careful estimate of the expense per man for the various groups 
is as follows : ^ 

^ 54.S.00 

^ S^.So 



D i' 

o. 50 



This is of course only an estimate, although a very careful one. 
Mr. Grieves estimated that tiie per capita cost averaged at least 
S40.- Mr. John U. Williams, of the Fayette R. Plumb Company of 
Philadelphia, a tool-making concern, states that ''the final cost per 
experienced man is over Sioo."^ 

Mr. Alexander estimated that the annual unnecessary expense for 
the twelve factories that he covered was between $830,000 and 
$1,000,000. If Mr. Grieves's estimate of an average cost of $40 is 
used, the total yearly loss for the twenty firms which he investigated 
was $1,760,000, or an average of $88,000 per firm. The yearly cost 
to the Ford Motor Company for its 416 per cent turnover was over 
$2,000,000. Since these are figures for only a few plants, the annual 
cost for the country as a whole must be tremendous. A most 
conservative estimate would be between one and two hundred millions. 


This excessive shifting from position to position clearly demon- 
strates that something is wrong with industry. In diagnosing its 
causes we are at the same time enabled to suggest certain remedies 
that may lessen it. 

S ome ni th euilQre_2ronijnent_causea,jire 

^' Poor methods of employment and discharge. Men are gen- 
erally hired en masse, with little regardlolKeir' qualifications, and 
fired summarily if they do not make good on the jobs upon which 
they are tried out. The power of employment and discharge is 

1 Alexander, op. cit., pp. 20-21. 
-W, A. Grieves, op. cit., p. 5. 

3 John M. Williams, "An Actual Account of what we have done to Reduce 
our Labor Turnover," Annals, Vol. LXXI, p. 54. 



generally vested in the foreman of each department. These men are 
rarely skilled in the tactful handling and judging of men. 

2. Poor methods of promotion within thejactory. Work in one 
position rarely leads to a higher position. The workman in any 
particular plant relies therefore upon a change to some other plant 
to better his status. 

3. The seasonal nature of many industries. The turnover is 
necessarily large ^vhere the volume of output is not evenly distrib- 
uted over the year. After the "peak" has been passed, many 
workmen must be laid off. If the peak reoccurs within a few months, 
a new force must be employed. Positions of short duration, spelling 
a high turnover, are the inevitable concomitants of seasonal industry. 

4. J uvenile J abor.. Children rarely stay long in one position. 
The fourteen- tTsixteen-year-old child is restless and wants to move 
about. A regular, settled employment rarely satisfies him. 

5. The monotony of modern factory labor. This is rarely men- 
tioned as a cause of labor turnover, but on a priori grounds we must 
infer that it exercises tremendous influence. Specialization and 
routine labor have rendered industry so dull that it is no wonder 
the modern artisan frequently throws up his job and seeks another 
plant from sheer weariness. 

6. Low wages. A plant that pays low wages cannot hold men 
long. TEey'regard the job as a makeshift and will leave it as soon 
as they can find another. 

Thus some of the causes of this newly discovered phenomenon are 
long-recognized evils, while some have been but newly brought to 
light. The remedy most frequently proposed by students of the sit- 
uation is the installation of a specialized employment department to 
have complete charge of the hiring, handling, and firing of men. 
In most factories the task of employment and the discharge of men 
is confided to the foremen of the various departments. Hands are 
both hired and fired in a hit-or-miss fashion. Many firms keep no 
employment records at all, and most of those that do keep such 
records have only scanty material. They seldom ask the reasons for 
the workman's leaving, nor do they measure the turnover depart- 
ment by department. The centralization of employment and dis- 
charge and the concentration of responsibility would permit the use 
of scientific methods. 


i \ 








Such a department could lessen the turnover in the following ways : 

1. By the use of a better method of selecting employees. Ph)^- 
caljte3la_would eliminate a considerable number that are now em- 
ployed only to be shortly discharged. Though mental tests have not 
developed as yet so far as to make it possible to assign men to the 
particular jobs for which they are best adapted, at least those 
mentally incompetent for industry could be eliminated. The various 
job s in t he plant could, moreover, be analyzed in respect to the 
amount of skill and intelligence required of the operative. The 
workers could then be divided into rough groups according to their 
previous training and innate mental ability and assigned to the 
corresponding grade of work. A centralized personnel depart ment 
could follow up and verify work references and thereby classify 
workers on the basis of past experience. And it could maintain a 

..waiting list, so that when new men were needed they could be chosen 
largely from men about whom something was known instead of, as 
now, being picked up off the streets. 

2. By fl^-sj^atem of folbw-up work for the new employees. This 
would include taking them to their place of work and indicating a 
friendly interest towards them. The training should be given prefer- 
ably by special instructors and not confided to the foremen. In 
many cases it is best to give the new men pr eliminary train ing be- 
fore they are actually placed in any department. Moreover, the 
working conditions should be closely watched by the personnel 
department in order to insure proper ventilation, lighting, the pre- 
vention of dust, and the lessening of fire and accident risks. To 
keep a record of absences, classified by individuals and by causes, 
would also be a legitimate task for such a department. 

3. By an investigation of the reasons for the successes and fail- 
ures of individual workmen. The method commonly employed is to 
discharge a workman if he fails to make good on a particular job. 
This involves a great waste. A workman may fail on a specific job 
and yet be a valuable man for the concern. It may be that the 
antagonistic attitude of the foreman or the men is such that he can- 
not do himself justice. It may be that he is ill-adapted to that partic- 
ular position but would be perfectly competent in a position in some 
other department. The worker embodies a considerable investment 
of capital by the employer and is worthy of at least another trial 



before he is discharged. The personnel department can find out the 
reasons for his lack of success and act accordingly. 

Should the worker succeed in a given position he should be com- 
mended and assured promotion. A welLdefined. prQmPtJQn policy 
would indeed save many a plant a great deal of dissatisfaction and 
lessened efficiency. The efficiency of the plant and the loyalty of 
the workers may be further heightened by the institution of dis- 
cussion groups at which plant problems can be explained and work- 
men's ideas solicited. This will also serve to bring to light hidden 
talent which could be utilized in executive work. 

The creation of such a personnel department, charged with these 
functions, is but the logical extension to the human side of industry 
of the scientific principles that have hitherto been employed on the 
mechanical side. It merely strips the department foreman of his 
employment functions and enables him to concentrate his attention 
upon the actual production of goods. With this splitting of the task- 
greater specialization and efficiency can result. The centralized em- 
ployment department has been tried in many plants and, on the 
whole, has been very successful.' Some illustrations of its success 
are (i) the reduction by the Dennison Manufacturing Company of 
its turnover from 68 per cent to 37 per cent a year ; (2) the reduction 
of the turnover by the Joseph and Feiss Company of Cleveland, Ohio, 
to one third its former amount ; ( 3 ) the lowering of the Plimpton Press 
turnover till it is now 6nly 10 per cent a year ; (4) the decrease in the 
Ford turnover from 416 per cent to less than 80 per cent. Other fac- 
tors besides that of the creation of such a department contribute to the 
marked decrease in three of these plants. Forms of profit-sharing were 
introduced into the Dennison and Ford companies, while the Dennison 
and Feiss plants also succeeded in regularizing their output .^ 

1 There are probably over 500 employment managers in the United States 
as a whole. The following cities have local associations of employment man- 
agers : Boston, Chicago, Cleveland, Detroit, Newark, New York, Philadelphia, 
Pittsburgh, Rochester, and San Francisco. The following are among the large 
concerns to have special emplovment departments: Sears, Roebuck & Co.; 
Marshall Field & Co.; Armour & Co.; Packard Motor Car Co.; Ford Motor 
Co.; Equitable Life Insurance Co.; R. H. Macy & Co.; American Tel. & Tel.; 
Curtis Pub Co.; John B. Stetson Co.; Westinghouse Electric Co.; Eastman 
Kodak Co.; Dennison Mfg. Co.; Cheney Bros. See J. H. Willetts, "Develop- 
ment of Employment Managers' Associations," U. S. Bureau of Labor Statistics, 
Monthly Review, Vol. V, No. 3 (1917), PP- 85-87. ^ Gregg, op. at. 







Small concerns would probably not find it profitable to create 
a special personnel department. Consequently this is one of the 
advantages of large-scale production. Whether there is a greater 
turnover in the larger plants which will offset this advantage is a 
question that cannot be answered at present. 

Profit-sharing is another method of insuring greater permanence 
of labor. Mr. Boris Emmet, who investigated profit-sharing schemes 
for the Bureau of Labor Statistics, says, "All the informants, with- 
out exception, were also of the opinion that the establishment of the 
plans has a tendency to reduce the percentage turnover of their 
working organization." ^ 

In so far as the labor turnover is caused by the seasonal nature 
of industry the creation of a specialized employment department 
would offer no remedy. Once the cost of labor turnover is recognized, 
the employers will see that the regularization of industry and the 
smoothing of the peaks of production will be economically bene- 
ficial to them. The efforts of the Clothcraft Shops of Cleveland 
and the Dennison Manufacturing Company have been turned espe- 
cially in this direction. 

The large turnover of children between fourteen and sixteen is 
merely another proof of the economic and social wastefulness of this 
class of labor. Industry and society would be much better off were 
the age of entrance into industry raised generally from fourteen to 
sixteen years. In so far as the labor turnover is due to the monotony 
of machine labor, few remedies within the plant can be devised. The 
men, to be sure, can be transferred from one machine to another.- 
But this is about all. The balking of man's innate tendency towards 
contrivance seems to be an inevitable consequence of the machine 
era. New avenues must be opened, outside of industry, for its 
legitimate expression. 

Whatever may be the final steps taken to solve this problem, its 
recognition signalizes a marked advance in the development of 
human engineering. 

Paul H. Douglas 

U. S. Emergency Fleet Corporation 

^"Profit-sharing in the United States," U.S. Bureau of Labor Statistics 
Bulletin No. 208 (191 7). 

-Mr. Dennison does this in his factory. 





GIVEN two establishments in the same industry, in the same local- 
ity, build for them the same buildings, equip them with the same 
machinery, and establish for them similar methods of handling 
equipment and materials — yet, in the course of a short time, there 
will be a difference in both the quantity and the quality of their out- 
put. This difference in result will be caused by the difference between 
the two in the quality of their personnel. For this reason alone 
the question of personnel must ultimately be considered the real 
problem of management. 

If one of the above plants were headed by a management of 
the ordinary or traditional type and the other by a management 
which fully realized the importance of personnel and had devel- 
oped an active philosophy tending toward the solution pi the per- 
sonal problem, the difference in practical results would be so 
great as to be unbelievable by the uninitiated. In fact, this differ- 
ence alone would often spell failure in the one case and success in 
the other. 

The managers of both plants would see the shortsightedness of 
letting buildings and other equipment run down for lack of upkeep 
and repair. Both would see the value of and put into practice means 
for running the machinery at the most efficient speeds and bringing 
into use the best tools and the best method of handling material. 
It would be taken for granted by both that anything that goes to the 
improvement and upkeep of these things would be a necessary ex- 
penditure or a wise investment. The ordinary management, how- 
ever, would not think of applying the same laws of upkeep and 
improvement to the personal equipment. . . . 

^From address before Society to Promote the Science of Management. 
Taylor Society Bulletin, November, 1915. 










i I 


Only actual comparison of the mechanical and other developments 
in this establishment with those in the next best establishment in the 
men's clothing industry would suffice to prove this point. The in- 
dustry generally is not in a very advanced state. The usual type of 
management is at the best only beginning to realize the existence of 
the personal side. As a result, machinery and equipment are almost 
universally limited to a few undeveloped or semideveloped types, 
regardless of whether or not they are most suitable for the purpose 
in the hands of the individual operator. In practically all these fac- 
tories you will find only a few types of machines, and these set up 
and equipped as they come from the manufacturers and running at 
haphazard speeds. Shears and all other tools are any which the em- 
ployee chooses to furnish for himself. 

In the Clothcraft Shops, working from the personal point of view, 
not only are tools developed and prescribed with regard to their suit- 
ability for the purpose of individual accomplishment, but all tools 
are furnished and maintained by the management. Fully 50 per 
cent of the different types of machines in use at the Clothcraft Shops 
are not, as far as is known, used in any other establishment in the 
industry, and practically every machine in use has been developed 
so as to be specially adapted for its particular purpose in the hands 
of the individual who uses it. In like manner the proper handling 
of materials and the installation of other methods developed under 
scientific management have been introduced in this establishment as 
necessary steps in the development of the highest efficiency of the 
individual. . . . 

All responsibilities of the management in the direction of personal 
service, directed toward the welfare and development of the indi- 
vidual, are part of the function of employment. For the purpose of 
administering this function the Clothcraft Shops of The Joseph and 
Feiss Company have established an Employment and Service De- 
partment. In this organization this department is considered one of 
the most important adjuncts to the management. 

While, as mentioned above, hiring is only a small part of the 
function of employment, nevertheless, the solution of the problem 
of selection is of great importance in its bearing on the whole 
future development of the worker. All applicants for positions are. 
interviewed by one of the heads of the Employment and Service 



Department of the Clothcraft Shops. Certain specific information 
concerning the applicant is obtained in every case and entered on 
a blank for the purpose. Information deemed essential consists of : 

Name and address. 

Date of application. 

Date and place of birth. 

Date of immigration, if foreign bom. 


Languages spoken. 


Whether married or single. 

Number in family. 

Wage contribution to family support. 

Record of previous employment. 

The idea should be to keep such records as simple as possible- 
only the important details being entered. 

Languages spoken may be important in many organizations for 
various reasons. In this establishment English-speaking applicants 
are given preference. In case employment should be given to an ap- 
plicant who does not understand English, the applicant must agree 
to attend one of the classes in English which are held at the factory. 
The Board of Education of the city of Cleveland has cooperated 
by furnishing teachers and textbooks for these classes. Where appli- 
cants do not speak the English language it has often been found 
that their residence in the country, and, consequently, their employ- 
ment, is considered merely temporary by them. In the case of those 
who do not speak the English language it has been found very diffi- 
cult to impart instructions and to obtain proper standards of out- 
put and quality. Of thirty-five employees (out of a total of nearly 
800) who have not sufficient knowledge of English to understand 
instructions thoroughly only one has reached efficiency equal to that 
of the best doing the same kind of work. Eight of this number have 
reached efficiency equal to less than the average, and the remaining 
twenty-six are the least efficient at their respective operations. More- 
over, people who cannot speak the same language cannot under- 
stand each other thoroughly, and therefore can never attain that 
State of friendly feeling which is the basis of cooperation and spirit. 










T hp mRttpr nfj ^ag e, contribution is imp ortRnf Other things being 
equal, preference should be given to those who have to support 
themselves or whose contribution to tlie fanuly income is a necessity. 
The custom of contributing the entire earnings to the family income 
is often an important element in inefficiency, especially where the 
contribution is in whole or in part unnecessary. Younger women 
who live at home are often required to turn over the entire contents 
of their pay envelopes to the head of the family, even where such a 
contribution is not necessary. By depriving the worker of the use 
of his earnings, the incentive toward efficiency is removed and ambi- 
tion destroyed. Cases of this kind are being constantly handled by 
the Employment and Service Department. A home visit by one of the 
staff has always resulted in an agreement being reached with the 
parents by which a stipulated sum was paid into the family ex- 
chequer and the remainder of the earnings kept by the employee in 
question and deposited in the Clothcraft Penny Bank. Such an 
arrangement has always proved beneficial and has developed an in- 
crease of efficiency ranging from 20 per cent upward. A case in 
point is that of Tillie B., who had been the subject of a great deal 
of attention over a long period of time for the purpose of increasing 
her earnings, which averaged 13 cents per hour. After an arrange- 
ment such as mentioned above had been made, Tillie's earnings im- 
mediately jumped and soon reached 22 cents an hour, which she 
held until she left the organization to be married. 

Information as to past employment is important as a record of 
experience and earnings. The number of positions held is also an 
indication as to whether or not the applicant is a floater. For pur- 
poses of reference this information is of little or no value and is 
never used at the Clothcraft Shops. Wherever possible, however 
applicants give as their references members of the Clothcraft organi- 
zation. This tends to keep alive in the organization an active interest 
m the kind of new employees. It is, moreover, a good indication of 
the applicant's character, since although a person cannot always be 
judged by his family, he can generally be judged bv his friends 

The interviewing of applicants is important and 'requires consid- 
erable tact, judgment, and experience. Ample space should be left 
on every application form for making notes as to the individual'^ 
special qualifications as well as any other circumstances surrounding 



the case. As judgment is essential, and as judgment is influenced 
by immediate impression, in this establishment no one is employed 
on the date of application. Postponement of selection tends to bring 
all applicants in their proper relationship in the mind of one who 
has the responsibility of their selection. This method, moreover, 
tends to reduce the number of floaters who otherwise might get on 

the pay roll. . •. \ 

Application records are classified as to sex, age, and apparent smt- \ 
ability. When a position is to be filled, one or more applicants are 
sent for. A definite time is set for their appearance, and self -addressed 
postal cards are inclosed to be mailed in case appointments cannot be 
kept. At this time selection is made for immediate employment, and 
the fitness of the applicant is more definitely determined. 

As a rule, in industrial establishments, where the question arises at 
all, only fitness for the wo rk is consider^ There are, however, two 
kindrSf^fitnesTtrr-bF-considered, pro'vided a person is suited for 
industry at all ; one is fitness for the position ; the other is fitness 
for the organization. Of these the latter is by far the more important. 

Fitness for the organization is chiefly a question of character. ^ 
Every organization has a distinct character of its own, which is often 
recognized as being a tangible business asset. It is essential, there- 
fore, that every member of the organization have a character suffi- 
ciently developed or capable of development to be in harmony with 
the character of the organization. This is the basis of esprit de corps. 
No matter how skilled or fitted one may be to do a given piece of 
work, if he is out of harmony with the spirit or character of the 
organization, he will be an everlasting detriment to himself and all 
others in the organization who come in contact with him. 

The interview of the applicant by a trained head of the Employ- 
ment and Service Department is the basis of predetermining as far 
as possible both the fitness for a position and for the organization. 
In judging fitness for a position, past experience, where there is any, 
is sometimes a guide. At the best, however, it is a guide of only 
doubtful value. Personal choice also can be taken in some instances 
as a guide. This predilection furnishes in itself a valuable incentive. 
Often, however, it is a case of bringing the child up on candy because 
he likes it. When considered at all, it is important to weigh care- 
fully all the reasons for the predilection. 






The applicant's fitness for the organization, while more important, 
is more readily predetermined by interview. The interview at the 
time of employment is very thorough and designed to explain to the 
prospective employee the character of the organization and its poli- 
cies, and the responsibilities of the organization to the employee as 
well as the responsibility of the employee to the organization. 

As the aim of the Employment and Service Department is to 
keep every position in the organization filled with fit men and women, 
^^.ISH^^iis^-Q^ iitasical and mental fitness of the individual is of 
pdme importa.nce. For the physical needs at the Gothcraft Shops 
a complete medical department is maintained as part of the Employ- 
ment and Service Department. A graduate nurse is in direct charge 
of this work. The equipment includes a dispensary, separate rest 
rooms, a waiting room, and a consultation room for the factory physi- 
cians. The medical staff consists of a physician, an oculist, and a 
dentist. The physician is at the factory three mornings a week, the 
oculist two mornings, and the dentist one morning. All medical 
work done at the factory is paid for by the company. Outside serv- 
ice of the factory physician is furnished to employees and their 
families at special rates, except in instances where the Employment 
and Service Department recommends treatment at the company's 
expense. In order to facilitate physical examinations required, the 
time of taking on new employees is being regulated so as to coincide 
with the time that the physician spends at the factory. Physical 
examinations of all members of the organization are repeated an- 
nually or with greater frequency if there is cause. 

The eye examination is of the greatest importance in considering 
applicants for certain positions. A preliminary examination is made 
by the nurse in order to discover any obvious defects of vision. Ar- 
rangements have been made by which, in case the oculist later pre- 
scribes glasses, they can be procured from a first-class optician at 
half the regular price. One of the greatest obstacles in connection 
with this work is the fact that many people who are in need of 
proper glasses have had glasses supplied to them by optical stores 
or by itinerant vendors without the advice of a practicing oculist. 
In most cases the trouble has only been aggravated. The benefits of 
an eye examination and the prescribing of proper glasses are readily 
apparent. In one case a young woman had worn the same glasses 



for a number of years. She had obtained them from a dealer whose 
business enterprise included the sale of glasses and jewelry. The 
young woman realized thoroughly that her eyesight was poor and 
complained constantly of eyestrain and headaches. She was an 
employee of the firm for a number of years and had always been 
more or less inefficient. Examination of her eyes by the factory 
oculist proved not only that her eyesight was very poor but that the 
glasses which she had been wearing for six years were fitted with 
nothing but plain window glass. Fitting her with proper glasses not 
only entirely eliminated the headaches, but, within a period of a 
few weeks, resulted in an increase in efficiency to a standard equal 

to the best. . . . 

Accidents are not of the major kind in the clothing mdustry, 
and even minor accidents have been practically eliminated at the 
Clothcraft Shops by a t horough systenw )f safety devices and in- 
struction. There are naturally, however, a number of cases where 
fingers-nrc-pticked in handling needles or where other minor injuries 
are incurred either away from or at work. Ordinarily these things 
are neglected and cause a great deal of inconvenience and much loss 
of time due to infections. Instructions are given that no one should 
be permitted to work with the slightest scratch or the slightest ache 
or pain, or any indication whatever of illness, without consulting the 
nurse. This has not only cut down the time lost from infections to 
almost nil but has also made it possible to forestall a great number 
of incipient cases of illness. This precautionary measure, together 
with the medical work in general, has undoubtedly been the means 
of keeping the working force of the Clothcraft Shops absolutely 
free from all epidemics that have swept through the community in 

the past few years. . 

Only one who has gone deeply into the question of health m its 
relation to efficiency can realize the loss occasioned by lack of knowl- 
edge and attention to even the simplest rules of hygiene. A great 
deal of work is constantly required to educate people to realize the 
necessity of fresh air, proper diet, and regular hours, lack of atten- 
tion to one or all of which is often the cause of inefficiency. What 
can be done by working along these lines is well illustrated by the 
following cases. At the time medical examinations were first installed 
at the Clothcraft Shops five young women were selected, all having 






been on the same operation from one to six years. These five had a 
record for absence, tardiness, and general inefficiency much worse 
than any of the other forty or fifty on the same operation. It was 
found that all five were accustomed to sleeping with windows closed 
at night and took no outdoor exercise at any time. All neglected the 
simple rules of diet, and two were accustomed to hurry away from 
home every morning without breakfast. One was found to be in 
need of eyeglasses. All complained of not feeling fit when they 
came to work in the morning and complained constantly of head- 
aches and a general debility, which naturally resulted in much 
absence from work. The cases were interviewed separately, proper 
advice was given, and the ultimate results of irregularity and in- 
efficiency were thoroughly gone into. By consistent follow-up the 
advice was soon accepted by all, with the result that tardiness and 
absence were practically eliminated in all cases, and efficiency was 
increased from 20 to 50 per cent. 

One phase of this work is worthy of special mention. No one who 
has ever been in actual touch with the men and women of an in- 
dustrial organization has failed to run across the case of the man 
who is down and out because of long sickness in his family. Doctor's 
bills and bills for medicines are rapidly getting him deeper and 
deeper in debt, or he may be brooding over what he thinks to be the 
last lingering illness of one of his family. A man with a load such 
as this can seldom hold up his end in either output or quaTRy. In 
the>asrntmTbef of cases an investigation will show that his..troubles 
can easily be alleviated. He is often the prey of an unscrupulous 
practitioner or some fraudulent fake who is bleeding the family for 
every cent that it can scrape together. Very often the family is 
despairing of medical assistance and is found to be squandering a 
large portion of its income on fake remedies at the instigation of the 
ignorant advice of neighbors or under the influence of the advertis- 
ing carried in unscrupulous newspapers. The prevalence of these 
conditions is of such amazing extent as to cry for public atten- 
tion. Unfortunately medical ethics seems too unethical to deal with 
the situation. By reason of its far-reaching effect, the handling 
and prevention of such cases must be considered one of the im^ 
portant accomplishments of the medical service of the Clothcraft 
Shops. . . , 



A great deal has been said and written about psychological tests 
for thejmrp Qse_of selection , but the little that lias been done of 
p7actical value has been limited almost entirely to a few tests for 
special aptitudes where special aptitudes are required. For the pres- 
ent, at least, such tests, even when practically developed, can be 
used only for the determination of individual limitations. At the 
Clothcraft Shops investigations and experiments have been carried 
on for this purpose. The tests that are being developed consist of 
general-intelligence tests, including a test for ability to follow in- 
structions and a series of tests for dexterity. Professor Walter Dill 
Scott of Northwestern University has been retained for the purpose 
of assisting in the development of these tests. Recently a series of 
tests were given under his direction with the assistance of Professor 
Henry A. Seager of Columbia University. Twenty-one subjects were 
chosen for the purpose and included members of the organization 
holding executive positions and operatives of different degrees of 
efficiency in various kinds of work. In practically every case the 
results of the tests checked up accurately with the estimate of general 
intelligence and dexterity based on records and personal acquaintance 
over a long period of time. 

The object of these tests is twofold. In^the fir^^t place, with the 
best of care errors are bound to occur in original selection and 
pla cem eh l. P fu p fe"are often placed on work for which they are not 
amr suited, and some are occasionally selected who are mentally 
unfit for the industry. This under no circumstances means that all 
the mentally deficient are unfit. There are, of course, all kinds of 
mental deficients, and there are a great many different kinds of work 
in most industrial establishments that can be done as efficiently by 
the mentally subnormal as by the normal. The human make-up 
is so complex that many instances have been found where a normal 
individual was incapable of reaching the same efficiency in certain 
kinds of work as a subnormal had reached. 

Several cases were taken at the Clothcraft Shops of people who 
were apparently deficient mentally. A series of tests was made by 
the Binet method in order to confirm this conviction and in order to 
get an approximate rating of their mental capacity. In most instances 
one who has not had intimate acquaintance with individual cases over 
a long period of time would not suspect any mental deficiency. A 




case in point is that of a girl who had been in the employ of the 
firm for about four years. Being employed rather young, she was 
put on an operation of the simplest kind. While on this operation 
she became very efficient. The result was that she was advanced 
and for another year was tried on various operations without being 
able to make good. By this time everybody had become more or 
less disgusted with IVIary at home and at the factory, and Mary quit 
to find other work. She returned in a few months, and as her spirit 
was good it was decided to give her another trial at machine work. 
Mary utterly failed to progress in spite of her apparent best efforts 
and the special attention given her for the purpose. It was then 
decided to try her at an operation where she was required to follow 
certain lines of the garments, trimming off surplus goods with hand 
shears— an operation that is simple from the point of view of the 
dexterity and intelligence required. Mary immediately began to make 
progress, and her earnings are averaging with the best. This is a 
typical case showing the waste of time and effort which it is hoped 
will be minimized with the assistance of tests. It is the aim to use 
the tests as an aid in selection, to avoid placing people who are 
either normal or subnormal on kinds of work for which they are very 
likely to prove unfit. 

The purpose of these tests in the second place is somewhat differ- 
ent, but Ills ot very great Impo"rlanc6 In an organization such as that 
of the Clothcraft Shops. It is the practice of this organization to fill 
positions of clerical or executive nature, and in fact all better posi- 
tions of any kind, by advancement. By this method a considerable 
percentage of the organization is moved up during a year's time. 
At the best a large number of mistakes have been made by advancing 
individuals to positions beyond their capacity. This, of course, in- 
volves eventually a reduction in position or loss of the individual to 
the organization. In any case the organization has suffered by a 
position pooriy filled, and the individual as well as those responsible 
for his training, has gone through a period of discouragement which 
often leaves a permanent effect. It is hoped by means of these tests 
to minimize these errors. . . 

Whenever possible the workers should be trained to perform more 
than one kind of work. In this way they can be used to help out 
in cases of emergency, some of which occur daily in every large 



establishment because of absences or other reasons. In the Clothcraft 
Shops all those willing to learn other work are given opportunity to 
do so and are paid a retainer while learning. All employees who are 
capable of helping out on an operation are carefully listed, and a 
definite hourly retainer is paid them whenever they do work on which 
they are not able to earn as much as on their regular operation. At 
all times the normal working force should be maintained, except 
only under such conditions as are forced upon the industry and 
beyond its control. Where there is a temporary lack of orders, due 
to industrial depression, seasonal fluctuations, and the like, the 
number of employees should not be cut down, but the number 
of hours of employment should be reduced equally throughout 
the whole organization. At the Clothcraft Shops this policy was 
strictly adhered to during the recent industrial depression, which 
reduced its normal working hours by approximately 15 per cent 
for a period of six months. While the percentage of quitters for this 
period was noticeably increased, nevertheless this increase was dimin- 
utive as compared to the number it would have been necessary to 
lay off had another policy been followed. We believe, moreover, the 
duty of providing steady employment under all possible conditions 
is a moral responsibility to the community at large. 

The seasonal character of some industries is a well -recognized ^ 
part of this problem. There is no doubt that in order to overcome 
this obstacle a great deal of public education is necessary. The fact 
remains, however, that the problem can for the greater part be 
solved by the industry itself. For this purpose purchases must be 
standardized and the purchasing policy itself so developed that a 
good proportion of orders can be anticipated. 

In this connection one of the most important things is the sales \ 
policy. Many businesses, even though having a highly developed 
manufacturing organization, have not a sales policy or sales organi- 
zation worthy of the name. It is only in exceptional instances that 
the sales policy and the manufacturing policy are property correlated. 
Ordinarily the sales department is administered with entire disregard 
of its most important function, viz., to market a product that will 
permanently be of most profit to the entire organization. The Joseph 
and Feiss Company, in order to meet the problem of furnishing steady 
employment, have for some time past conducted an advertising 





i j. 


campaign concentrating on certain staple numbers. I'he volume of 
sales that has resulted has been sufficient under normal conditions to 
provide steady employment when other establishments in the same 
industry have been shut down. As to this phase of the problem, 
however, the surface has, as yet, only been scratched. The men who 
hold the purse strings must sooner or later learn that the correct 
point of view, both morally and for the purpose of permanent return 
not only to themselves but to all the organization, involves the reali- 
zation that the factory does not exist for the purpose of turning out 
for a temporary profit whatever it is easiest to sell, but that the sales 
force is part of the manufacturing organization to market whatever 
it can most steadily and, therefore, most profitably produce. 

From the record of absentees and tardies it is shown that during 
the first six months of 191 5 the average number of tardies was only 
two and one-half persons per day. This is equal to one third of i 
per cent of the working force. For purposes of accurate follow-up, 
absences are classified as excusable and inexcusable. The excusable 
absences averaged a little over seven persons per day, or nine tenths 
of I per cent of the working force. The inexcusable absences 
averaged only a little less than four per day, or five tenths of 
I per cent. The total absentees per day averaged eleven, or only 
1.4 per cent. 

In regard to quitters a little more explanation is necessary. Very 
few people realize the tremendous cost to industry from this cause. 
Various estimates of this cost have been made. These estimates vary 
from $50 to $200 per person, depending on the nature of the work 
and character of employee obtainable and the percentage of old 
employees who are rehired. Taking even the lowest possible esti- 
mate, it would seem that any reasonable outlay of both money and 
effort for the purpose of reducing this industrial and social waste 
would be justifiable. At the Clothcraft Shops, in recognition of the 
tremendous loss from this source and the consequent value of notice 
in case of a contemplated severance from the organization, such 
notice is paid for at the rate of an amount equal to a day's pay for 
every week's notice, but not in any case to exceed an amount greater 
than four days' pay. . . . 

Nothing shows more cleariy the progress which has been made 
in this respect at the Clothcraft Shops than the record of ^' labor 


turnover" for the five years from 19 10 to 19 14 inclusive, as sho\vn 

in Table 


Table i. 

Labor Turnover, 1910-1914 


Stand. Pay Roll 

New Hands 

Per Cent 










lOI I 


f 01 2 


1 C\J 1 ....... 




These records tell their own story. It may be also worthy of note 
that over one third of the members of the Clothcraft organization 
have been in the continuous employ of the company for a period of 
five years or more. It is practically impossible to obtain accurate 
figures as to normal labor turnover. In the few instances where 
figures are available, progress has already been made. In the case 
of one large concern, in the men's clothing industry, the number of 
people employed for 1914 amounted to 115 per cent of the pay roll, 
which is undoubtedly better than the average in the industry. The 
following relating to a somewhat similar industry is from the report of 
the Federal Industrial Relations Commission (page 166): 

An investigation of the cloak and suit industry in New York 
showed the maximum number of employees in sixteen occupations 
during any week of the year to be 1952. Actually, however, 
the pay rolls showed that 4000 people were employed m these 
occupations. . . . 

The open road to talent is an essential to every successful organi- 
zation. At the Clothcraft Shops the road is not only open but every 
possible aid is given for advancement. Practically all positions in 
the organization, including clerical and executive positions, are filled 
by those who by reason of sheer personal merit have come up from 

the ranks. 

One of the most important functions of the Employment and 
Service Department is to develop organization spirit and free ex- 
pression of personal and public opinion. It forms a direct channel 
of expression from its source to the ear of the management. In fact 
the chief purpose of a scientifically organized department is nothing 



; ! 






more than the development of that intimate personal contact so 
necessary to management. At the Clothcraft Shops about one fifth 
of the total number of employees come daily in contact with the 
Employment and Service Department. All cases where direct contact 
with the management would be beneficial are immediately referred to 
it. This requires constant daily contact of the management with the 
department, and brings it into intimate relationship with a great 
many more cases than would be possible in the average organization 
of much smaller size. Wherever the management assumes the policy 
of the closed door, this department may well be shut down. 

Results cannot be accomplished in the spirit of charity, but must 
emanate entirely from a sense of justice. It must be understood that 
work along the lines described above can never take the place of 
wages. Such work must have as a reason for its existence not only 
increased efficiency but the increased reward to which increased 
efficiency is entitled. The progress of the Clothcraft Shops in respect 
to wages and efficiency from June, 1910, to January, 191 5, is shown 
by an increase in production of 42 per cent ; an increase in the aver- 
age individual hourly wages of 45 per cent, weekly wages 37 per 
cent ; and a decrease in total manufacturing cost of about 10 per 
cent. During this period the weekly working schedule was reduced 
from fifty-four to forty-eight hours. 

It is our belief that results, such as these, are obtainable only 
when scientific management is scientifically applied. Scientific man- 
agement will live if for no other reason than that it has faced the 
problem squarely and recognizes that the science of management is 
the science of handling men. 

Richard A. Feiss 




THANKS to the peace obtained,— in spite of its oppressiveness 
and all its insecurity, — the Russian Soviet Republic is en- 
abled for a certain time to concentrate its efforts on the most im- 
portant and most difficult side of the socialist revolution, the problem 
of organization. 

This problem is presented clearly and precisely to the masses in 
the fourth section of the resolution adopted at the extraordinary con- 
gress of the Soviets held at Moscow on March 16, 19 16, the section 
which urges self-discipline of the workers and a merciless struggle 
against chaos and disorganization. . . . 

In every socialist revolution — and hence also in the socialist revo- 
lution in Russia inaugurated by us on November 7, 1917,"— the 
main task of the proletariat and of the poorest peasantry led by 
it consists in the positive and constructive work of establishing 
an extremely complex and delicate net of newly organized relation- 
ships covering the systematic production and distribution of prod- 
ucts which are necessary for the existence of tens of millions of 
people. The successful realization of such a revolution depends on 

1 Extracts from address by Nikolai Lenin, Russian Communist Premier, in 
June, 191Q, forecasting the decrees of the Bolshevik government issued the 
following February. As a result of the confiscation of factories without compen- 
sation to the owners, resulting in destruction of credit and the breakdown of 
discipline, Lenin announced in this speech the resort to compulsory labor in fac- 
tories, the dictatorship of industry by the leaders of the communist army, a 
proposed introduction of scientific management, and the desperate predicament 
that followed the expulsion of business management and the attempt of the 
Soviets to operate the factories. (See Introduction, p. x.) Translated for 
the Rand School of Social Science. 

2 November 7, 191 7, is the date of the successful Bolshevik coup d'etat. 
The Kcrcnsky coalition government was forced to abdicate on that day, and 
the Soviet government, with the Bolshevik leaders, Nikolai Lenin and Leon 
Trotsky, at the helm, was instituted in its place. 




If If rirar 


the original historical creative work of the majority of the population, 
and first of all of the majority of the toilers. The victory of the 
socialist revolution will not be assured unless the proletariat and the 
poorest peasantry manifest sufficient consciousness, idealism, self- 
sacrifice, and persistence. With the creation of a new type of state, 
— the Soviet,— offering to the oppressed toiling masses the oppor- 
tunity to participate actively in the free construction of a new 
society, we have solved only a small part of the difficult task. The 
main difficulty is in the economic domain : to raise the productivity of 
labor, to establish strict and uniform state accounting and control of 
production and distribution, and actually to socialize production. . . . 
We are now confronted by the third problem, which is the most 
urgent and which characterizes the present period — the industrial 
organization of Russia. We had to deal with it and have been 
solving it ever since November 7, 191 7. But heretofore, as long as 
the resistance of the exploiters manifested itself in open civil war- 
fare, the problem of management could not become the principal, 
the central, problem. 

At present it has become the central problem. We, the Bolshevik 
party, have convinced Russia. We have won Russia from the rich 
for the poor, from the exploiters for the toilers. And now it is our 
task to manage Russia. The special difficulty of the present period 
consists in understanding the peculiarities of the transition from the 
problem of convincing the people and suppressing the exploiters by 
force to the problem of management. . . . 

"Keep accurate and conscientious accounts; conduct business 
economically; do not loaf; do not steal; maintain strict disci- 
pline at work." These slogans, which were justly ridiculed by revo- 
lutionary proletarians when they were used by the bourgeoisie to 
cover its domination as a class of exploiters, have now, after the 
overthrow of the bourgeoisie, become our urgent and principal slo- 
gans. On the one hand, the practical realization of these slogans by 
the toiling masses is the sole condition for the salvation of the 
country, . . . and, on the other hand, the practical realization of 
these slogans by the Soviet power, with its methods, and on the 
basis of its laws, is necessary and sufficient for the final victory of so- 
cialism. This, however, is not comprehended by those who contemp- 
tuously refuse to urge such " common " and " trivial " slogans. In our 


agricultural country, which only a year ago overthrew czarism and less 
Zn half a year ago freed itself from the ^e-skys there r^^^^ 
naturally, a good deal of unconscious anarchism, which is increased 
by the b stiality and barbarity accompanying every prolonged and 
reactionary war' and a good deal of despair and a^-less anger ha 
accumulated. H we should add to this the t™ab\pol.^^^^^^^^^ 
servants of the bourgeoisie- the Mensheviks, the ^^^f'^^^'^^^ 
of the Right, etc.-it will become clear that energetic and persistent 
efforts must be exerted by the best and most conscious workers and 
pe ants to effect a complete change in the mood oj. the masses and 
to turn them to a regular, uninterrupted, and ^--P^^^f ^ ^J^J' 
Onlv such a change accomplished by the masses of proletarians 
S near proletarians can complete the victory over the bourgeoisie 
and especially over the more persistent and numerous peasant 

'TdtS;; 'importance is the organization of strict and uniform 
accounting and control of production and distribution. But we 
have not ^et effected accounting and control in those enterprises and 
in those branches and departments of economic effort which we have 
taken away from the bourgeoisie. Without this there can be no 
question of the second condition, just as essential to the establish- 
Tnt of socialism; that is, the increase of the productivity of labor 

on a national scale. ... • »• „f tv,„ <>■, 

Heretofore measures for the immediate expropriation of the ex- 
propriators were preeminent. At present preeminence """^t ^e gwen 
to L organization of accounting and control m h°se enterpns^ 
in which the capitalists have already been expropnated W re we to 
attempt now to continue the expropriation of capital at the same 
r^e as heretofore, we would surely be defeated. It is clear to every 
hnking person tLat our work of organizing proletarian accounting 
and ontrol has not kept pace with the work of the direct^^ro- 
nriation of the expropriators. If we now turn al our efforts to 
^ aSng accoun'ng'and control we shall be able to so ve h^s 
problem ; we shall overcome our shortcomings and win our cam 

Te\rte?Su"ntiy "reproached by the servants of the 
bourgeois for conducting a "Red Guard" attack on capitalism. An 
absurd reproach, worthy indeed of servants of the money pouch I 







The " Red Guard " attack on capitalism was at that time absolutely 
dictated by the circumstances. First, capitalists were offering military 
resistance through Kerensky and Kransnov, Savinkov and Goltz 
(Gegechkori is even now offering such resistance), Dutov and Boga- 
jevsky/ Military resistance can be crushed only by military means, 
and the "Red Guards" were contributing to the noblest and greatest 
cause in history, the cause of emancipation of the exploited toilers 
from the oppression of the exploiters. 

Secondly, we could not then give preeminence to the method of 
management instead of the methods of suppression, because the art of 
management is not inherent in people but is gained through experi- 
ence. At that time we did not have this experience. We have it now ! 
Thirdly, then we could not have at our disposal specialists in 
different branches of science, for they were either fighting in the 
ranks of the Bogajevskys or were still in a position to offer systematic 
and persistent passive resistance through sabotage. 

Does this mean that the ''Red Guard" attack on capital is the 
right method always in all circumstances, and that we have no other 
methods of combating capitalism ? To think so would be too naive. 
We have won with light cavalry, but we also have heavy artillery 
at our disposal. We have been winning by methods of suppression ; 
we will be able to win also by methods of management. We 
should be able to change the methods of fighting with the change 
of circumstances. We do not for a moment reject the "Red Guard" 
suppression of the Savinkovs and Gegechkoris as well as of any 
other bourgeois counter-revolutionists ; but we will not be so stupid 
as to give preeminence to the " Red Guard " methods. 

At present, when the epoch of " Red Guard " attacks is in the 
main completed (and completed victoriously), it is becoming urgent 
for the proletarian state authority to make use of the bourgeois spe- 
cialists for the purpose of replowing the soil so that no bourgeoisie 
can grow on it. 

This is a peculiar stage of development, and in order definitely 
to defeat capitalism we should be able to adapt the forms of our 
struggle to the peculiar conditions of such a period. 

^ 1 Persons representing bourgeois counter-revolutionary elements, and social- 
ist groups actively opposing the Bolsheviks and direcUy or indirectly aiding the 


Without the direction of specialists in different branches of science, 
such as technical men, the transformation toward socialism is im- 
possible, for socialism demands a conscious mass movement toward 
a comparatively higher productivity of labor on the basis which has 
been attained by capitalism. Socialism must accomplish this move- 
ment forward in its own way, by its own methods ; to make it more 
definite— by Soviet methods. But the specialists are inevitably 
bourgeois, on account of the whole environment of social life which 
made them specialists. If our proletariat, having obtained power, 
had rapidly solved the problem of accounting, control, and orgam- 
zation on a national scale (this was impossible on account of the 
war and the backwardness of Russia), then having crushed the 
sabotage of the capitalists, we would have obtained, through uniform 
accounting and control, the complete submission of the bourgeois 
specialists. In view of the considerable delay in establishing ac- 
counting and control, although we have succeeded in defeating sabo- 
tage we have not yet created an environment which would put at 
our disposal the bourgeois specialists. Many saboteurs are coming 
into our service, but the best organizers and the biggest specialists 
can be used by the state either in the old bourgeois way (that is, 
for a higher salar>0 or in the new proletarian way (that is, by 
creating such an environment of uniform accounting and control 
as would inevitably and naturally attract and gain the submission 
of specialists). We are forced now to make use of the old bour- 
geois method and to agree to a very high remuneration for the serv- 
ices of the biggest of the bourgeois specialists. All those who are 
acquainted with the facts understand this, but not all give sufficient 
thought to the significance of such a measure on the part of the 
proletarian state. It is clear that such a measure is a compromise, 
that it is a defection from the principles of the Paris Commune and 
of any proletarian rule, which demand the reduction of salaries to 
the standard of remuneration of the average workers— principles 
which demand that " career hunting " be fought by deed, not by words. 
Furthermore, it is clear that such a measure is not merely a halt, 
in a certain part and to a certain degree, of the offensive against capi- 
talism (for capitalism is not a quantity of money but a definite 
social relationship) but also a step backward by our socialist Soviet 
state, which has from the very beginning proclaimed and carried on 



I iff Iff 

' ! Ii mHBf 


a policy of reducing high salaries to the standard of wages of the 
average worker. 

Of course the lackeys of the bourgeoisie, particularly of the petty 
kind, like the Mensheviks and the Social-Revolutionists of the 
Right, will sneer at our admission that we are taking a step back- 
ward. But we should pay no attention to sneers. We must study 
the peculiarities of the highly difficult and new road to socialism 
without concealing our mistakes and weaknesses. We must try to 
overcome our deficiencies in time. To conceal from the masses that 
attracting bourgeois specialists by extremely high salaries is a 
defection from the principles of the Commune would mean that we 
had lowered ourselves to the level of bourgeois politicians who rule 
by practicing deception. To explain openly how and why we have 
taken a step backward, and then to discuss publicly ways and means 
to overcome our deficiencies, is to educate the masses and to learn 
from experience — to learn together with them how to build socialism. 
There has hardly been a single military campaign in history in which 
the victor has not made mistakes, suffered partial defeats, and tem- 
porarily retreated at some time. And the "campaign" against cap- 
italism which we have undertaken is a million times more difficult 
than the most difficult military campaign, and it would be foolish 
and disgraceful to become dejected on account of a temporary and 
partial retreat. 

Let us take up the question from the practical side. Let us as- 
sume that the Russian Soviet Republic must have a thousand first- 
class scientists and specialists, of recognized skill and with practical 
experience in different departments of science, to direct the work of 
the people in order to accomplish most quickly the economic reha- 
bilitation of the country. Let us assume that these great "stars" 
must be paid 25,000 rubles each per annum. Let us assume that 
this sum just be doubled (supposing premiums to be granted for 
particularly successful and rapid accomplishment of the most im- 
portant tasks of organization and technic) or even made four times 
as large (supposing that we must get several hundred better-paid 
foreign specialists). Well, then, can this expenditure of 50,000,000 
or 100,000,000 rubles a year for the reorganization of the work of 
the people along the lines of the latest scientific developments be 
considered excessive or unbearable for the Soviet Republic? Of 


course not. The vast majority of the enlightened workers and 
peasants will approve such an expenditure, knowing from practical 
life that our backwardness compels us to lose billions, and that we 
have not yet attained such a high degree of organization, accountmg, 
and control as would cause the universal and voluntary partici- 
pation of these -stars" of the bourgeois intelligentzia^ in our work. 
Of course there is another side to this question. The corrupting 
influence of high salaries is beyond dispute-both on the Soviets 
(the more so since the swiftness of the revolution made it possible 
for a certain number of adventurers and thieves to join the Soviets, 
who, together with the incapable and dishonest among certain com- 
missaries, would not object to becoming "star grafters' ) and on the 
mass of workers. But all thinking and honest workers and peasants 
will agree with us and will admit that we are unable to get rid at 
once of the evil heritage of capitalism ; that the Soviet Republic 
can be freed from a tribute of 50,000,000 or 100,000,000 rubles 
(a tribute for our own backwardness in the organization of account- 
ing and control from the bottom up) only by organization, by in- 
creasing discipline among ourselves, by getting rid of all those who 
<^keep the traditions of capitalism," that is, the loafers, parasites, 
and grafters If the enlightened and advanced workers and peasants 
succeed, with the help of the Soviet institutions, in orgamzing and 
disciplining themselves and in creating a powerful labor discipline in 
one vear, then we will in one year do away with this tribute 
(which may be reduced even earlier), depending on the measure of 
success attained in creating labor discipline and organization among 
the workers and peasants. The sooner we ourselves, workers and 
peasants, learn better labor discipline and a higher technic of toil, 
making use of the bourgeois specialists for this purpose, the sooner 
we will get rid of the need of paying tribute to these specialists. ^ 

Our work of organization, under the direction of the proletariat, 
of state accounting and control of production and distribution is 
considerably behind our work of direct expropriation of the ex- 
propriators. We understand this is fundamentally necessary for 
understanding the peculiarities of the present period and of the 
problems dictated by these to the Soviets. The center of gravity 
of the struggle with the bourgeoisie is shifted to the organization of 
1 Middle-class intellectuals form a separate entity in Russian society. 

I; ■' 

■ '' ' 




accounting and control. This must be taken into account in order to 
determine correctly the urgent economic and financial problems con- 
cerning the nationalization of banks, monopolization of foreign trade 
state control of currency, the introduction of a satisfactory wealth 
and income tax from the proletarian standpoint, and the introduction 
of obligatory labor service. 

We are extremely backward in regard to socialist reforms in these 
fields (and they are very important fields), and we are backward for 
no other reason than this— that accounting and control, in general, 
are not sufficiently organized. Of course this problem is one of the 
most difficult, and with the economic disorganization produced by 
the war its solution must take a long time, and it should not be 
overlooked that just here the bourgeoisie (and especially the numer- 
ous petty and peasant bourgeoisie) give us a good deal of trouble, 
disturbing the establishment of control— disturbing, for instance' 
the grain monopoly, gaining opportunities for speculation and specu- 
lative trade. What we have already decreed is yet far from adequate 
realization, and the main problem of today consists precisely in con- 
centrating all efforts upon the actual, practical realization of the 
reforms which have already become the law, but have not yet become 
a reality. 

In order to continue further the nationalization of the banks and 
to move steadily toward the transformation of the banks into cen- 
ters of social bookkeeping under socialism, we must first of all 
be successful in increasing the number of branches of the People's 
Bank, in attracting deposits, in making it easier for the public to 
deposit and withdraw money, in removing the possibility of panics, in 
discovering and executing the grafters and crooks, etc. We must first 
actually accomplish the simplest tasks, organize well what is already 
in our possession— and only then prepare for the more complex. 

We must improve and regulate the state monopolies in grain, 
leather, etc., which we have already established, and thereby pre- 
pare for the state monopolization of the foreign trade; without 
such a monopoly we shall not be able to "get rid of" foreign capital 
except by the payment of a "tribute." WTiatever possibility of 
socialist construction exists depends on whether we shall be able to 
protect our internal economic independence during the transition 
period by paying some "tribute" to foreign capital. 


We are also extremely backward in the collection of taxes in general 
and of wealth and income taxes in particular. The levying of contri- 
butions on the bourgeoisie— a measure which in principle is undoubt- 
edly acceptable and deserving of proletarian approval— fehows that we 
are in this respect still nearer to the methods of conquest [of Russia] 
from the rich for the poor than to the methods of management. 
But to become stronger and to make our position firm we must 
adopt the last-named methods ; we must substitute for the contri- 
butions exacted from the bourgeoisie steadily and regulariy collected 
wealth and income taxes, which will give more to the proletarian 
state and which requires* of us greater organization and better- 
regulated accounting and control. 

The delay in introducing obligatory labor service is another proof 
that the most urgent problem is precisely the preparatory organi- 
zation work which, on the one hand, should definitely secure our gains 
and which, on the other hand, is necessary to prepare the cam- 
paign to "surround capital" and to "compel its surrender." The 
introduction of obligatory labor service should be started imme- 
diately, but it should be introduced gradually and with great caution, 
testing' every step by practical experience and, of course, introducing 
first of all obligatory labor service for the rich. The introduction of 
a labor record book and a consumption-budget record book for every 
bourgeois, including the village bourgeois, would be a long step for- 
ward toward a complete "siege" of the enemy and toward the 
creation of a really universal accounting and control over production 

and distribution. 

The state, an organ of oppression and robbery of the people, left 
us as a heritage on the part of the people a great hatred for and dis- 
trust of everything connected with the state. To overcome this is a 
very difficult task, which only the Soviets can master, but which 
requires even from them considerable time and tremendous persever- 
ance. This "heritage" has a particulariy painful effect on the ques- 
tion of accounting and control— the fundamental question for a 
socialist revolution after the overthrow of the bourgeoisie. It will 
inevitably take some time before the masses begin to feel themselves 
free after the overthrow of the landowners and the bourgeoisie and be- 
fore they comprehend— not from books, but from their own expe- 
rience through the Soviets— that without thorough state accounting 

S I 




( : 





( ■ . * 


and control of production and distribution the authority of the toilers, 
and their freedom, cannot last, and a return to the yoke of capitalism 
is inevitable. . . . 

^ We have introduced labor control as a law, but it is barely be- 
ginning to be realized or even to penetrate the consciousness of the 
proletarian masses. That unaccountability in production and dis- 
tribution is fatal for the first steps toward socialism, that it means 
corruption, that carelessness in accounting and control is a direct 
assistance to the German and Russian Kornilovs, who can overthrow 
the authority of the toilers only in case we do not solve the problem 
of accounting and control and who with the aid of the peasant bour- 
geoisie, the cadets, the Mensheviks, and the Socialist-Revolutionists 
of the Right are watching us, waiting for their opportunity— this is 
not adequately emphasized in our agitation and is not given suffi- 
cient thought and is not sufficiently discussed by the advanced 
workers and peasants. And as long as labor control has not be- 
come a fact, as long as the advanced workers have not carried 
out a successful and merciless campaign against those who violate 
this control or who are careless with regard to control, we cannot 
move from the first step [from labor control] to the second step 
toward socialism; that is, to the regulation of production by the 

A socialist state can come into existence only as a net of pro- 
duction and consumption communes, which keep conscientious ac- 
counts of their production and consumption, and economize labor, at 
the same time steadily increasing its productivity, thus making it 
possible to lower the workday to seven, six, or even less hours. 

To increase the productivity of labor we must first of all secure 
the material basis of a large industry: the development of the 
production of fuel, iron, machinery, and of the chemical industry. 
The Russian Soviet Republic is in such an advantageous position 
that it possesses, even after the Brest-Litovsk peace, colossal stores 
of ore [on the Ural]; of fuel in western Siberia [hard coal], in 
Caucasia and in the southeast [petroleum], in Central Russia [turf] ; 
vast resources of lumber, water power, and raw material for the 
chemical industry [karabugaz]; and so on. The exploitation of 
these natural resources by the latest technical methods will furnish 
a basis for an unprecedented development of production. 

Higher productivity of labor depends, first, on f improvement 
of the educational and cultural state of the masses of the population 
Ths improvement is now taking place with unusual swiftness, but 
is not perceived by those who are blinded by the bourgeois rou me 
and are unable to comprehend what a longing for light and initiative 
is now pervading the masses of the people, thanks to the Soviet or- 
l^lLs. Secondly, economic improvement depends on higher 
Sine of the toilers, on higher skill, efficiency, and intensity of 
labor, and its better organization. ... w • f 

The most conscious vanguard of the Russian P-^^^ariatJias 
already turned to the problem of increasing labor discipline. For n- 
stlnce' the central committee of the Metallurgical Umon and the 
Central Council of the Trade Unions have begun work on respective 
measures and drafts of decrees. This work should be supported and 
Advanced by all means. We should immediately introduce piece- 
work and ti it out in practice. We should try out every scientific 
Ind progresle suggestion of the Taylor system; we should com- 
pare ^he earnings with the general total of production or the exploi- 
tation results of railroad and water transportation and so on 

The Russian is a poor worker in comparison with the workers 
the advanced nations, and this could not be otherwise under the 
Sme of he Czar and other remnants of feudalism. To learn how 
;Crk_this problem the Soviet authority should present to the 
people in all its comprehensiveness. The last word of capitalism m 
th" esp^^^ the Taylor system,-as well as all progressive measures 
ofcSism,-combines the refined cruelty of bourgeois exploita- 
to and a number of most valuable scientific attainments in the 
analyst of mechanical motions during work, in dismissing super- 
Tous Ld useless motions, in determining the ^^ co^ct^^^^^^^^^^^ 
of the work, the best systems of accounting and ^^f\'\'-J^' 
Soviet Republic must adopt valuable scientific and technical ad- 
V nes in this field. The possibility of socialism will be determined 
bv our su cess in combining the Soviet rule and the Soviet organi- 
by our succebb & orogressive measures of capi- 

zation of management with the latest P^ogresb^ teaching of 

talism We must introduce in Russia the study and the caching ot 
h Tav^sy and its systematic trial and adaptation^ While 

worklg to ncrease the productivity of labor, we must at the same 
Ze take into account the peculiarities of the transition period from 



ill HP 





fi J 

i ; 

p ! 

t I 


capitalism to socialism, which require, on the one hand, that we lav 
the foundation for the socialist organization of emulation, and on 
the other hand require the use of compulsion, so that the slogan 
of the dictatorship of the proletariat should not be weakened by the 
practice of a too mild proletarian government 

Among the absurd falsehoods which the bourgeois likes to spread 
about socialism is the one that socialists deny the value of emulation 
In reality only socialism, destroying classes and, hence, the en- 
slavement of the masses, for the first time opens up opportunities 
for emulatwn on a mass scale. And only the Soviet organization 
passing from the formal democracy of a bourgeois republic to the 
actual participation in management of the toiling masses, for the first 
time puts emulation on a broad basis. This is much easier to accom- 
P ish on the political than on the economic field, but for the success 
of socialism the latter is the more important. 

Let us take publicity as a means for stimulating emulation 
And we have hardly begun the immense and difficult, but also 
promising and important, work of stimulating emulation between 
he communes, of introducing reports and publicity in the process of 
the production of bread, clothing, etc., and of transforming the dry 
dead bureaucratic reports into live examples-either repulsive or at- 
tractive. Under the capitalistic system of production the significance 
of an individual example, say of some group of producers, was inevi- 
tabty extremely limited, and it was only a petty bourgeois illusion 
to dream that capitalism could be "reformed" by the influence of 
models of virtuous establishments. After the political power has 
passed into the hands of the proletariat and after the expropriation 
of the expropriators has been accomplished, the situation is radi- 
cally changed, and -as has been many times pointed out by the 
most eminent socialists- the force of an example can for the firs 
time exert a mass effect. Model communes should and will serve 
the purpose of training, teaching, and stimulating the backward 
comrnunes. The press should serve as a weapon of socialist con- 
struction, giving publicity in all details to the successes of the model 
communes, studying the principles of their success, their methods 
of economy, and, on the other hand, <' blacklisting" those communes 
^hich persist in keeping the "traditions of capitalism," that is 
anarchy, loafing, disorder, and speculation. Statistics under capitalism' 



were exclusively in the hands of government employees or narrow 
specialists ; we must bring them to the masses, we must popularize 
them so that the toilers gradually learn to understand and to see 
for themselves what work and how much work is needed and how 
much rest they can have. In this way a comparison between the 
results of the enterprise of different communes will become a sub- 
ject of general interest and study ; the foremost communes will be 
immediately rewarded (by reducing the workday for a certain period, 
by raising the wages, offering them a greater quantity of cultural or 
historical advantages and treasures, etc.). • . . 

No profound and powerful popular movement in history ever 
escaped paying a price to the scum; the inexperienced innovators 
have been preyed upon by adventurers and crooks, boasters and 
shouters; there have been stupid confusion, unnecessary bustle. 
Individual "leaders" would undertake twenty tasks at once, com- 
pleting none of them. Let the poodles of bourgeois society, from 
Bielorussoff to Martov, yelp and bark on account of every addi- 
tional splinter going to waste while the big old forest is cut down. 
Let them bark. That is what poodles are there for. We will go 
ahead, trying very cautiously and patiently to test and discover real 
organizers, people with sober minds and practical sense, who com- 
bine loyalty to socialism with the ability to organize quietly (and 
in spite of confusion and noise) efficient and harmonious joint work of 
a large number of people under the Soviet organization. Only such 
persons should, after many trials, advancing them from the simplest 
to the most difficult tasks, be promoted to responsible posts to direct 
the work of the people, to direct the management. We have not yet 
learned this. We will learn this. 

The resolution of the last (Moscow) congress of the Soviets advo- 
cates, as the most important problem at present, the creation of 
"efficient organization" and higher discipline. Such resolutions are 
now readily supported by everybody. But that their , realization 
requires compulsion, and compulsion in the form of a dictatorship, 
is ordinarily not comprehended. And yet it would be the greatest 
stupidity and the most absurd opportunism to suppose that the 
transition from capitalism to socialism is possible without compulsioD 
and dictatorship. The Marxian theory has long ago criticized beyond 
misunderstanding this petty bourgeois-democratic and anarchistic 



nonsense. And Russia of 191 7-19 1 8 confirms in this respect the 
Marxian theory so clearly, palpably, and convincingly that only those 
who are hopelessly stupid or who have firmly determined to ignore the 
truth can still err in this respect. Either a Kornilov dictatorship 
(if Kornilov be taken as the Russian type of a bourgeois Cavaignac) 
or a dictatorship of the proletariat — no other alternative is pos- 
sible for a country which is passing through an unusually swift 
development, with unusually difficult transitions, and which suffers 
from desperate disorganization created by the most horrible war. 
All middle courses are advanced (in order to deceive the people) 
by the bourgeois, who are not in a position to tell the truth and 
admit openly that they need a Kornilov, or (through stupidity) by 
the petty-bourgeois democrats, — the Tchernovs, Zeretellis, and Mar- 
tovs, — prattling of a united democracy, of the dictatorship of democ- 
racy, of a single democratic front, and similar nonsense. Those who 
have not learned even from the course of the Russian revolution of 
1917-1918 that middle courses are impossible must be given up as 

On the other hand, it is not hard to see that during any transition 
from capitalism to socialism a dictatorship is necessary for two main 
reasons. In the first place, it is impossible to conquer and destroy 
capitalism without the merciless suppression of the resistance of the 
exploiters, who cannot be at once deprived of their wealth, of their 
advantages in organization and knowledge, and who will, therefore, 
during quite a long period inevitably attempt to overthrow the 
hateful (to them) authority of the poor. Secondly, every great revo- 
lution, and especially a socialist revolution, even if there were no 
external war, is inconceivable without an internal war, with thou- 
sands and millions of cases of wavering and of desertion from one 
side to the other and with a state of the greatest uncertainty, 
instability, and chaos. . . . 

This historical experience of all revolutions, the universal his- 
torical, economic, and political lesson, was summed up by Marx in 
his brief, sharp, exact, and vivid formula: the dictatorship of 
the proletariat. And that the Russian revolution has correctly ap- 
proached this universal historical problem has been proved by the 
victorious march of the Soviet organization among all the peoples 
and tongues of Russia. For the Soviet rule is nothing else than the 


organized form of the dictatorship of the proletariat— the dictator- 
ship of the advanced class awakening to a new democracy and to inde- 
pendent participation in the administration of the state, tens and 
tens of millions of exploited toilers who through their experience are 
discovering that the disciplined and class-conscious vanguard of the 
proletariat is their most reliable leader. 

But "dictatorship" is a great word. And great words must not 
be used in vain. A dictatorship is an iron rule, with revolutionary 
daring and swift and merciless in the suppression of the exploiters as 
well as of the thugs [hooligans]. And our rule is too mild, quite 
frequently resembling putty rather than iron. We must not for a 
moment forget that the bourgeois and petty-bourgeois environment 
is offering resistance to the Soviet rule in two ways: on the one 
hand, by external pressure— by the methods of the Savinkovs, 
Goltzes, Gegechkoris, and Kornilovs, by conspiracies and insurrec- 
tions, with their ugly ''ideologic" reflection, by torrents of falsehood 
and calumnv in the press of the Cadets, Social-Revolutionists of the 
Right, and Mensheviks ; on the other hand, this environment exerts 
internal pressure, taking advantage of every element of decay, of 
every weakness, to bribe, to increase the lack of discipline, dissolute- 
ness, chaos. The nearer we get to the complete military suppression 
of the bourgeoisie, the more dangerous become for us the petty 
bourgeois anarchic inclinations. And these inclinations cannot be 
combated simply by propaganda and agitation, by the organization of 
emulation, by the selection of organizers ; they must also be com- 
bated by compulsion. 

To the extent to which the principal problem of the Soviet rule 
changes from military suppression to administration, suppression and 
compulsion will, as a rule, be manifested in trials and not in shoot- 
ing on the spot. And in this respect the revolutionary masses have 
taken, after November 7, 191 7, the right road and have proved the 
vitality of the revolution, when they started to organize their own 
workmen's and peasants' tribunals before any decrees were issued 
dismissing the bourgeois-democratic judicial apparatus. But our revo- 
lutionary" and popular tribunals are excessively and incredibly weak. 
It is apparent that the popular view of courts— which was inher- 
ited from the regime of the landowners and the bourgeoisie— as not 
belonging to the workers, has not yet been completely destroyed. 





It is not sufficiently appreciated that the courts serve to attract 
all the poor to administration (for judicial activity is one of the 
functions of state administration) ; that the court is an organ 
of the rule of the proletariat and of the poorest peasantry ; that 
the court is a means of training in discipline. There is a lack 
of appreciation of the simple and obvious fact that if the chief 
misfortunes of Russia are famine and unemployment, these misfor- 
tunes cannot be overcome by any outbursts of enthusiasm, but only 
by thorough and universal organization and discipline, in order to 
increase the production of bread for men and fuel for industry, to 
transport these in time, and to distribute them in the right way ; that, 
therefore, responsibility for the pangs of famine and unemployment 
falls on everyone who violates the labor discipline in any enter- 
prise and in any business ; that those who are responsible should 
be discovered, tried, and punished without mercy. The petty bour- 
geois environment, which we will have to combat persistently now, 
shows particularly in the lack of comprehension of the economic 
and political connection between famine and unemployment and 
the prevailing dissoluteness in organization and discipline — in the 
firm hold of the view of the small proprietor that "nothing matters 
if only I gain as much as possible." 

This struggle of the petty-bourgeois environment against proleta- 
rian organizations is displayed with particular force in the railway 
industry, which embodies, probably, most clearly the economic ties 
created by large capitalism. The "office" element furnishes sabo- 
teurs and grafters in large numbers; the proletarian element, its 
best part, is fighting for discipline. But between these two elements 
there are, of course, many who waver, who are "weak," who are 
unable to resist the "temptation" of speculation, bribery, and per- 
sonal advantage, at the expense of the industry, the uninterrupted 
work of which is necessary to overcome famine and unemployment. 

A characteristic struggle occurred on this basis in connection with 
the last decree on railway management, the decree which granted 
dictatorial (or "unlimited") power to individual directors. The 
conscious (and mostly, probably, unconscious) representatives of 
petty-bourgeois dissoluteness contended that the granting of "un- 
limited" (that is, dictatorial) power to individuals was a defection 
from the principle of board administration, from the democratic and 


other principles of the Soviet rule. Some of the Social- Revolu- 
tionists of the Left carried on a plainly demagogic agitation against 
the decree on dictatorship, appealing to the evil instincts and to the 
petty-bourgeois desire for personal gain. The questions thus pre- 
sented are of really great significance : first, the question of principle. 
Is, in general, the appointment of individuals endowed with unlimited 
power, the appointment of dictators, in accord with the fundamental 
principles of the Soviet rule? secondly. In what relation is this 
case— this precedent, if you wish— to the special problems of the 
Soviet rule during the present concrete period ? Both questions de- 
serve serious consideration. 

That the dictatorship of individuals has very frequently in the 
history of revolutionary movements served as an expression and 
means of realization of the dictatorship of the revolutionary classes 
is confirmed by the undisputed experience of history. The dictator- 
ship of individuals has undoubtedly been compatible with bourgeois- 
democratic principles, but this point is always treated adroitly by 
the bourgeois critics of the Soviet rule and by their petty-bourgeois 
aides. On the one hand, they declare the Soviet rule simply some- 
thing absurd and anarchically wild, carefully avoiding all our histori- 
cal comparisons and theoretical proofs that the Soviets are a higher 
form of democracy — nay, more, the beginning of a socialist form 
of democracy. On the other hand, they demand of us a higher 
democracy than the bourgeois, and argue, "Individual dictatorship 
is absolutely incompatible with your Bolshevist [that is, socialist, 
not bourgeois] democratic principles, with the Soviet democratic 


Extremely poor arguments, these. If we are not anarchists, we 
must admit the necessity of a state (that is, of compulsion) for the 
transition from capitalism to socialism. The form of compulsion is 
determined by the degree of development of the particular revolu- 
tionary class, then by such special circumstances as, for instance, 
the heritage of a long and reactionary war, and then by the forms 
of resistance of the bourgeoisie and the petty bourgeoisie. There 
is, therefore, absolutely no contradiction in principle between the 
Soviet (socialist) democracy and the use of dictatorial power of in- 
dividuals. The distinction between a proletarian and a bourgeois 
dictatorship consists in this : that the first directs its attacks against 




the exploiting minority in the interests of the exploited majority ; 
and, further, in this: that the first is accomplished (through in- 
dividuals) not only by the masses of the exploited toilers but also by 
organizations which are so constructed that they arouse these masses 
to creative work of historic significance. The Soviets belong to this 
kind of organization. 

With respect to the second question on the significance of indi- 
vidual dictatorial power from the standpoint of the specific prob- 
lems of the present period, we must say that every large machine 
industry — which is the material productive source and basis of 
socialism — requires an absolute and strict unity of the will which 
directs the joint work of hundreds, thousands, and tens of thousands 
of people. This necessity is obvious from the technical economic 
and historical standpoint and has always been recognized as its 
prerequisite by all those who have given any thought to socialism. 
But how can we secure a strict unity of will ? By subjecting the will 
of thousands to the will of one. 

This subjection, if the participants in the common work are 
ideally conscious and disciplined, may resemble the mild leading of 
an orchestra conductor ; it may also take the acute form of a dic- 
tatorship, if there is no ideal discipline and consciousness. At any 
rate, complete submission to a single will for the success of the proc- 
esses of work organized on the type of large machine industry is 
absolutely necessary. This is doubly true of the railways. And 
just this transition from one political problem to another which in 
appearance has no resemblance to the first constitutes the peculiarity 
of the present period. The revolution has just broken the oldest, 
the strongest, and the heaviest chains to which the masses were 
compelled to submit. So it was yesterday. And today the same 
revolution — and indeed in the interest of socialism — demands the 
absolute submission of the masses to the single will of those who 
direct the labor process. . . . 

We have successfully solved the first problem of the revolution. 
We saw how the toiling masses formed in themselves the fundamental 
condition of a successful solution — united efforts against the ex- 
ploiters to overthrow them. Such stages as October, 1905,^ and 

1 October, 1905, saw the beginning of the first Russian Revolution. It was 
during that month that the general strike was declared and the open struggle 


March and November, 1917, are of universal historical significance. 
We have successfully solved the second problem of the revolution 
—to awaken and arouse the downtrodden social classes which were 
oppressed by the exploiters and which only after November 7, 191 7, 
have obtained the freedom to overthrow them and to begin to take 
stock and to regulate their lives in their own way. The "meeting- 
holding" of the most oppressed and downtrodden, of the least- 
trained toiling masses, their joining the Bolsheviks, their creating 
Soviet organizations everywhere,— this is the second great stage of 
the revolution. 

We are now in the third stage. Our gains, our decrees, our laws, 
our plans, must be secured by the solid forms of everyday labor 
discipline. This is the most difficult, but also the most promising, 
problem, for only its solution will give us socialism. We must learn 
to combine the stormy, energetic breaking of all restraint on the part 
of the toiling masses with iron discipline during work, with absolute 
submission to the will of one person, the Soviet director, during work. 

We have not yet learned this, but we will learn it. 

The restoration of bourgeois exploitation threatened us yesterday 
through the Kornilovs, Goltzes, Dutovs, Gegechkoris, Bogajevskys. 
We defeated them. This restoration, the very same restoration, 
threatens us today in a different form, through the environment of 
petty-bourgeois dissoluteness and anarchism, in the form of ordinary, 
small, but numerous attacks and aggressions of this environment 
against proletarian discipline. This environment of petty-bourgeois 
anarchy we must and we will conquer. 

The socialist character of the Soviet democracy — that is, of 
proletarian democracy in its concrete particular application — con- 
sists first in this : that the electorate comprises the toiling and ex- 
ploited masses ; that the bourgeoisie is excluded. Secondly, in this : 
that all bureaucratic formalities and limitations of elections are done 
away with ; that the masses themselves determine the order and 
the time of elections and with complete freedom of recall of elected 
officials. Thirdly, that the best possible mass organization of the 
vanguard of the toilers — of the industrial proletariat — is formed, 

between the revolutionary forces and the autocracy ensued. The Czar's 
government was forced to grant a constitution (October 30) and establish a 
parliamentary form of government (Duma). 




enabling them to direct the exploited masses, to attract them to ac- 
tive participation in political life, to train them politically through 
their own experience ; that in this way a beginning has been made 
for the first time actually to get the whole population to learn how 
to manage and to begin managing. . . . 

This proximity of the Soviets to the toiling people creates special 
forms of recall and other methods of control by the masses which 
should now be developed with special diligence. For instance, the 
councils of popular education deserve the fullest sympathy and sup- 
port as periodical conferences of the Soviet electors and their dele- 
gates to discuss and to control the activity of the Soviet authorities 
of the particular region. Nothing could be more foolish than turning 
the Soviets into something settled and self-sufficient. The more 
firmly we now have to advocate a merciless and firm rule and dicta- 
torship of individuals for definite processes of work during certain 
periods of purely executive functions, the more diverse should be the 
forms and means of mass control in order to paralyze every possi- 
bility of distorting the Soviet rule, in order repeatedly and tire- 
lessly to remove the wild grass of bureaucratism. . . . 

Try to compare w^ith the ordinary^ popular idea of a " revolution- 
ist" the slogans which are dictated by the peculiarities of the present 
situation : to be cautious, to retreat, to wait, to build slowly, to be 
mercilessly rigorous, to discipline sternly, to attack dissoluteness. 
Is it surprising that some "revolutionists," hearing this, become full 
of noble indignation and begin to "attack" us for forgetting the 
traditions of the November revolution, for compromising with bour- 
geois specialists, for compromises with the bourgeoisie, for petty- 
bourgeois tendencies, for reformism, etc. etc.? . . . 

Nikolai Lenin 

Premier, Russian Soviet Republic 


IT IS very difficult to distinguish between the premium and the 
bonus systems of remuneration, for the two names are used almost 
indiscriminately. The term ''bonus" is, however, more frequently 
applied at the present time to any contingent payment, and any 
plan under which such payments are offered is likely to be called 
a "bonus" plan or system. 

The first examples of such plans were, however, known as pre- 
mium plans. Under them the extra payment or premium was 
generally a fixed proportion, usually a half, and almost never more 
than a half, of what the workers' regular wages would be for the 
number of hours or minutes by which he reduced the time formerly 
taken on an average to turn out a given amount of work. The 
essentials of the system were set forth by Mr. F. A. Halsey,^ with 
whose name the premium system is most closely associated, in a 
paper read before the American Society of Mechanical Engineers in 

The essential principle is ... as follows : the time required to 
do a given piece of work is determined from previous experience, and 
the workman, in addition to his usual daily wages, is offered a 
premium for every hour bv which he reduces that time on future 
work, the amount of the premium being less than his rate of wages. 
]VIaking the hourly premiums less than the hourly wages is the 

1 From Appendix B, " The Standard Rate in American Trade Unions," Johns 
Hopkins University Studies in Historical and Political Science, Series XXX, 
No. 2 (1912), pp. 23S-241. r .1. « • 

2 Systems of payment involving the essential features of the premium 
plan," that is, extra payments for time saved at rates below the regular rate 
for that time, had been occasionally used in the metal trades before Mr. Hal- 
sey's plan was proposed. Some of these were referred to as '"bonus" plans. 
(Transactions of the American Society of Mechanical Engineers, Vol. VIII, 
p. 469; Vol. X, p. 622; Vol. XII, p. 767) ^ . c. ^• 

^Ibid. Vol. XII, pp. 7S5 et seq. Paper, without discussion, Economic Studies, 
American Economic Association, Vol. I, No. 2 (1896). 




foundation stone on which rest all the merits of the system, since 
by it if an hour is saved on a given product the cost of the work is 
less and the earnings of the workman are greater than if the hour is 
not saved, the workman being in effect paid for saving time. 

Assume a case in detail: Under the old plan a piece of work re- 
quires ten hours for its production, and the wage paid is 30 cents 
per hour. Under the new plan a premium of 10 cents is offered the 
workman for each hour which he saves over the ten previously re- 
quired. If the time be reduced successively to five hours, the results 
will be as follows : 



Time Consumed 


Wages per 


Total Cost 


CoL. 2 + Coi.. 3 

Workman's Earn- 
ings HER Hour 
Col. 4-4- Col. i 










0.3 1 1 

















The amount of the premium, according to Mr. Halsey, should vary 
with the degree to which the extra output requires an increased 
exertion on the part of the worker. In 1895 be said: 

The only system which will endure is the one which pays the 
least possible per piece of product. The purpose of these systems is 
not, prmiarily, to pay higher wages but to produce cheap work, the 
adjustment sought being one which shall give the workman an in- 
creased wage per day in return for the decreased cost per piece of 

The more recently advocated systems, to which the term "bonus" 
has usually been applied, seem to have as their essential aim the 
reaching of a specific output considerably higher than the previous 
average. Mr. F. W. Taylor described a system of remuneration be- 
fore the American Society of Mechanical Engineers in 1895, which 
he called a "differential rate system of piecework," in which the 
central aim was to secure " the largest amount of work of a certain 
kind that can be done in a day." A rising rate per piece as the 
output increased toward the maximum was the stimulus offered the 

1 Transactions, Vol. XVI, p. 885. 

worker in the scheme of payment.^ Mr. Taylor insisted then and 
later that the central point in his system was the ascertainment 
through a determination of " unit times," that is, the shortest time 
in which each separate operation can be performed, of the maximum 
output which can be expected in a given time from good workmen 
working at the highest rate of speed which can be regularly main- 
tained. His differential rate system of payment was intended as an 
inducement to the men to maintain that rate of output after it had 

been ascertained. ^ 

In 1895, in reply to a criticism that the rise in the rate as the out- 
put approaches the maximum results in a higher labor cost per piece 
for the enlarged output than would be the case under an ordinary 
piece system, Mr. Taylor said : 

On the contrary, with the differential rate the price will, in nine 
cases out of ten, be much lower than would be paid per piece either 
under an ordinary piecework plan or on day's work. An illustration 
of this fact can be seen by referring to paragraphs 78 to 83 of the 
paper, in which it will be found that a piece of work for which 
the workmen had received for years, under the ordinary piecework 
system, 50 cents per piece, was done under my system for 35 cents 
per piece while in this case the workmen earned $3.50 per day, 
when they had formerly made, under the 50 cent rate, only S2.25 

per day.^ ... . , , 1 • 

It is quite true that under the differential rate the workingmen earn 
higher wages than under other systems, but it is not that they get 
a higher price per piece, but because they work much harder, since 
they feel that they can let themselves out to the fullest extent with- 
out danger of going against their own interests * 

In 1901 Mr. H. L. Gantt presented to the same society a paper 
describing a " Bonus System of Rewarding Labor, being a System of 
Task Work with Instruction Cards and a Bonus." Under his plan 
of payment the specified task is made the worker^s goal, and if he 
fails to reach it he receives no bonus. 

^Transactions, Vol. XVI, pp. 856-903. (This paper is also reprinted in the 
Economic Studies, Vol. I, No. 2.) 

^Ibid. Vol. XVI, pp. 875, 903; Vol. XXIV, pp. i337-i338. 

3 In the case referred to, the original output was four to five a day; the 
maximum was set at ten, and when ten were produced in a day 35 cents per 
piece was paid; when less than ten were turned out in a day less per piece 
was paid. ^Ibid. Vol. XVI, pp. 887 et seq. 




If the man follows his instructions and accomplishes all the work 
laid out for him as constituting his proper task for the day, he is 
paid a definite bonus in addition to the day rate which he always 
gets. If, however, at jthe end of the day, he has failed to accomplish 
all of the work laid out, he does not get his bonus but simply his 
day rate. . . . This system is, so far as the writer is aware, a new 
one, but it is based on the principles of Mr. Fred. W. Taylor's system 
of elementary rate fixing.^ 

Mr. Harrington Emerson describes a system of bonus payment in 
the Engineering Magazine for February, 1909, which is based on a 
system of ''standard time determination." A "standard time" is 
established, which is considered the minimum time in which the 
given output can be reached by the use of the best methods. The 
worker who turns out the work in the "standard" time is said to 
have an "efficiency of 100 per cent." The workman receives a 
fixed sum and in addition receives as a bonus a percentage of his 
regular rate which increases more than proportionally with each per 
cent of efficiency attained above 67 per cent. At 80 per cent 
efficiency, for instance, the bonus is 3.27 per cent; at 90 per cent, 
9.91 per cent ; at 95 per cent, 14.53 per cent ; and at 100 per cent 
efficiency it is 20 per cent. If the workman increases the output 
above the "standard," the bonus increases i per cent for each added 
percentage of efficiency above 100 per cent ; at 133K per cent 
efficiency, for example, the bonus would be 53^/ per cent. 

The average output before the introduction of the system is con- 
sidered as 67 per cent efficiency. A worker who reaches 100 per cent 
efficiency must turn out 50 per cent more output in a given time than 
before. Assume, for example, that workmen with a wage rate of 
40 cents an hour have been turning out on an average 6 units of a 
given article in six hours. The new " standard time " for 6 units is 
set at four hours. One and a half units of output is now said to be 
a "standard hour." If the worker turns out 6 units in six hours, 
as before, he has made but four standard hours in six hours of 
working time and his efficiency is but 67 per cent. Therefore, he re- 
ceives simply his hourly rate of 40 cents and no bonus. If he turns 
out 6 units in five hours, he has made four standard hours in five 
hours of working time and his efficiency is 80 per cent. He will now 

^Transactions, Vol. XXIII, pp. 341-372; Vol. XXIV, p. 1322; Vol. XXX, 
p. 1042. 



receive his regular rate of 40 cents an hour for the five hours worked 
and a bonus of 0.327 per cent of that sum— a total of $2.07, or 414 
cents an hour. If he does the work in standard time and turns out 
the 6 units in four hours, he has made four standard hours in four 
hours of working time and receives his regular rate for the latter, 
$1.60, plus 20 per cent of that as a bonus— a total of S1.92, or 48 
cents per hour. If he should be able to reduce the standard time 
to such an extent that he halves his previous time for the 6 units, he 
makes four standard hours in three working hours and his efficiency is 
1331^ per cent. He would then receive pay at his regular rate for 
the three hours, $1.20, plus a bonus of 53>^ per cent of that— a 
total of $1.84 or 61^ cents an hour. 

The labor cost to the employer, or the price per piece received by 
the worker, decreases, of course, as the output increases. At the old 
output, or 67 per cent efficiency, the rate per unit is 40 cents ; at 
80 per cent efficiency it is 34.5 cents ; at 100 per cent, 32 cents ; and 
at 133^ per cent, 307^ cents. 

These plans for bonus payment are frankly intended to stimulate the 
worker to increased effort. Mr. Taylor, Mr. Gantt, Mr. Emerson, and 
Mr. Halsey all assume that most workers could considerably increase 
their outputs under present methods without over-exertion. Mr. Taylor 
said in 1903, in advocating his system of work and payment: 

That there is a difference between the average and the first-class 
man is known to all employers, but that the first-class man can do in 
most cases from two to four times as much as is done on an average 
is known to but few, and is fully realized only by those who have 
made a thorough and scientific study of the possibilities of men. . . . 
It must be distinctly understood that in referring to t]ie possibili- 
ties of a first-class man the writer does not mean what he can do 
when on a spurt or when he is overexerting himself, but what a good 
man can keep up for a long term of years without injury to his health 
and become happier and thrive under .^ 

It appears from other statements of this writer that the difference 
between what the first-class man can do and what the average man 
does lies largely, in his opinion, in differences in intensity of effort.^ 
Mr. Taylor does, however, lay great stress upon the necessity of 
selecting the men who are to be asked to work under his plan. 

^Transactions, Vol. XXIV, p. i345- 

2 Ibid. Vol. XVI, pp. 864, 878; Vol. XXIV, p. 1350. 





Mr. Gantt says that for a ''fixed daily wage" the ordinary work- 
man "will seldom do more than a fraction of the work he can 
do.^ " Mr. Emerson, in describing his own efficiency system, quotes 
Mr. Taylor's views with approval and proceeds on the same assump- 
tion that the worker, if he will, can greatly increase his output without 
injury to himself.- In his first paper, in 1891, Mr. Halsey, speaking 
of the daywork plan, said : 

He [the workman] has consequently no inducement to exert him- 
self and does not exert himself. ... In certain classes of work an 
mcrease m production is accompanied with a proportionate increase 
of muscular exertion, and if the work is already laborious, a liberal 
premium will be required to produce results. In other classes of 
work increased production requires only increased attention to speeds 
and feeds, with an increase of manual dexterity and an avoidance 
of lost time. In such cases a more moderate premium will suffice.-^ 

The same views are reaffirmed by IVIr. Halsey in an article in the 
American Machinist, March, 1899. 

^J^- Gaj itt and Mr. Emerson both emphasize particularly that the 
increased ouFputs are'To come in large part from improvements in 
the methods followed by the workman in performing his tasks. The 
payment of bonuses is advocatecTnoronryaTa means of calling out 
additional exertion on the part of the worker but as an inducement 
to the workman to follow instructions and to cooperate in the intro- 
duction of methods which increase output with only a fractional in- 
crease in exertion on his part. Their systems are rather "efficiency" 
systems than mere schemes of pa^^HTen t ; the bonus plans oi paymen t 
are followed only as a part of the general scheme for increasing the 
efficiency of* the working-force and thereby reducing the labor cost 
of production.^ 

David A. McCabe 

Princeton University 

^ Transactions, Vol. XXIV, p. 267. 
^Engineering Magazine, May, 1908. 
3 Transactions, Vol. XII, p. 760. 

M.V^f • /"fk^^"^"^' ^' ^^'' ^'"'- ^™^' P- '^y' Engineering Magazine, 
May, 1908; February, 1909, passim. 




PIECE rate is the leading variety of those forms of industrial 
remuneration which are known collectively as ''payment by 
results." Under each of these methods, in contrast to time wage, the 
performance of the workman is measured at frequent intervals, and 
he is paid accordingly. He thus works for himself as well as for the 
employer and has a direct incentive to " take up the slack " on his 
work, which last may often be accomplished through exercise of 
ingenuity as well as through greater exertion. Under time wage the 
advantage or gain from taking up slack accrues solely to the em- 
ployer, and the only incentive that the workman has to create that 
gain ( apart from any contingent participation in the profits or the 
fear of discharge ) is the indirect or generalized incentive of a pos- 
sible future advance of his rate of pay or promotion to a higher 
position. Day by day and job by job as he goes along, the typical 
workman remunerated by the hour is a hireling paid for his time, not 
a tradesman paid for his product, and any reward for well-doing is 
too remote and contingent to have full psychological effect. " Pay- 
ment by results" dignifies labor by making the workman to a degree 
his own master, and on each job it has direct psychological effect 
with respect to zeal of performance. This is the theory of payment 
by results, but unfortunately the application of it has been such as 
to bring about much discontent and bitterness in the industrial 
world, and to cause widespread '' limitation of output," or just the 
opposite of taking up slack. 

Methods of wage payment by results fall into three main classes : 
th£.iLhQnus" method (including differential piece rate),ihe "pre^ 
miu m " mitliod ( mcluding some bonus schemes falsely so called), 
and_ordiBary piecfijate- All these methods have several subvarieties. 
Piece rate is used in combination with guaranteed time wage in sev- 
eral different ways; there are a number of different forms of the 

iFrom American Economic Review, Vol. IX (i9i9)> PP- 455-467- 









premium method and of the bonus method. Even if a few distinctive 
types alone were described, the technicalities involved would make 
this paper unduly long and complex. My purpose in writing it will 
therefore be best served by confining myself to a discussion of 
"straight" piecej;ate; that is, the paymen t of a fixed amount of 
money, irrespec tive of the time acuTaily taken^ for each unTHTpF^d- 

iict counted, measured, oF weighed. ~ ' — 

The leading elements of piece rate are revealed when we consider 
what is done in "setting a rate" or '^pricing a job" to be paid for 
by this method. 

I- There is the more or less complete definition of thejoj). The 
job is, or should be, a certain operation on a certain ^^part" or kind 
of material, performed by hand or by machine, and there may be 
certain appliances to facilitate the work, such as jigs or other tools. 
Of course it makes a great difference what machines, run at what 
speed, working on what quality of material, and in what quantity. 
The workman cannot get his hand in as well on short jobs frequently 
changed as on lon^ jobs changed infrequently. Piece rate is not neces- 
sarily confined to "repetition work," but, as is well known, it fits 
best that class of manufacturing. 

2- T^^ereisjh^ of the approximate time it will take 
^°^^iiSi2Er^^L is, Usually, nornrrtime for" the indi^oHUiTpTec? 
but for the whole number of pieces (or yards or pounds ) to be done 
together as one batch or lot. For example, five hours is estimated to 
be the time required to do, working briskly, a lot of 500 pieces. 

3-„i^ken into £ojosiderati^^ the grade of labor proper for 
t\^ job and the hourly wage rate of That grade' f for exampTe7for 
this job a grade of labor that calTs for weekly earnings of $22 in 
a fifty-five-hour week and therefore a time rating or base wage of 
40 cents an hour. (If the working hours per week were forty-four, 
then for this $2 2-a-week grade of labor the time rating would be 
50 cents an hour.) This base wage multiplied by the estimated time 
required or expected to be taken yields a rate or price for the job 
which is the equivalent of the standard of pay thus far assumed to 
be proper for the job. (Thus five times 40 cents equals $2.) This 
last is called, in shop terminology, " time." If the workman should 
do just two of these jobs in a ten-hour day and be paid S4, he would 
be said to be making his " time." 



4. And, finally, it.4sjakenjjitx>^^^ piece 

rates are properly set) thixSE^Qikmaa^musTHrje^^^ 
desired --ffTr^^-*f**^H "pi>rp-rate intensity of effort," or voluntary 
zeal in performance, which is the employer's object in going to the 
trouble of putting the job on piece rate and incurring continuing 
expense in counting and recording for the pay roll after the rate is 
set. If the workman is to have opportunity to make only "time" 
on the job, he will not exert himself to develop speed or ingenuity any 
more than if he were on ordinary day wage. He must have the in- 
centive of an opportunity to make more than his time ; there must 
be a bonus factor in the piece rate. Accordingly the piece-rate 
equivalent of the base time wage ($2 in this case) is increased by, 
say, 25 per cent to enable the workman to make at the assumed 
proper speed of working what is called "time and a quarter"— $2.50 
for the job, or 20 cents an hour, or S5 in a ten-hour day. This final 
revision of the job price sets a standard rate of remuneration for the 
job as put on piece rate, the unit of pay being adjusted to the unit 
of effort, which is what the workman sells in the last analysis rather 
than the physical product. If the employer, as sometimes happens, 
omits the bonus factor from the revised piece rate and depends for 
results upon ^^ driving," he is attempting to get "piece-rate intensity 
of effort" without paying for it. 

The rest of the process of rate-setting is merely arithmetic — 
dividing the revised job price by the number of pieces comprising 
the job or lot (500 in this case), which yields five tenths of a cent 
as the individual piece rate, or piece price, for doing this work. 
Thereafter, whatever the varying number of pieces the workman may 
do in any pay-roll period, the ascertained count is multiplied by five 
tenths of a cent and he finds the money in his pay envelope to 
correspond. It is obvious that as long as the rate stands un- 
changed the advantage from any "time saved" in doing the work, 
as compared with the estimated time required by which the rate was 
set, accrues solely to the workman. That is, the employer gains 
nothing on direct labor cost if the workman takes up more slack than 
was expected. The employer's gain in that event consists in a lower 
total cost by reason of the fixed charges or overhead being spread 
over a larger product, together with the further indirect advantages 
from prompt delivery to customers and other like considerations. 




To sum up, the complicated structure of a piece rate properly set 
includes (i) the definition of the job (not merely the name of 
the job but a statement of the controlling conditions under which the 
work is done); (2) the time-required basis; (3) the base time 
wage, or hourly rating ; (4) the bonus, or standard reward for effort, 
which the workman is expected to earn if the actual time taken coin- 
cides with the time expected to be taken. The labor value of any 
time saved by a greater speed of working is to go to the workman 
as additional bonus. 

The great source of trouble in the prevailing practice of piece rate 
is that the time-required basis of the rate is usually, in fact almost 
always on new work, estimated far too liberally. There are a variety 
of reasons for this : for one thing, the desire to enable men new to 
the work to earn good pay from the start. (A commendable object 
that should be achieved by another method, by paying a learner's 
retaining fee.) But chief of all is the lack of proper definition of 
the job before the time estimate is made. Indeed, such is the usual 
absence of any attempt at adequate standardization of the job — 
predetermination of proper speed and feed of the machine, quality 
of the material, appliances to be used, motions of the workman— 
that the conditions under which the work is to be performed are 
quite in the air, and it is a euphemism to say that the necessary 
time to be taken is "estimated." It is merely guessed at, and even 
the guessing is not done with respect to anything that is definite. 
Accordingly, as soon as the workman becomes thoroughly habitu- 
ated to the work and the job itself is "smoothed out," it is commonly 
found that it can be done easily in much less time than that embodied 
in the rate. If nothing holds the workman back from doing what 
he can do, he goes ahead taking up slack until presently there is 
such a saving of time that his earnings mount to "time and a third " 
"time and a half," "double time," or even more. ' 

It is to be noted that such is the cumulative effect of doing work 
in the time saved and getting pay for it that the workman's earn- 
ings for any pay period increase in accelerated ratio with the time 
saved. To earn "time and a half," even under piece rate with no 
bonus factor, it is not necessary for the workman to reduce his time 
of performance by 50 per cent of the time embodied in the rate but 
by only S3}i per cent of that time. If he should cut the time in 




half (not at all an uncommon accomplishment, even where the time 
is supposed to have been set "close"), his earnings when he is work- 
ing consistently at that speed would become "double time." He 
would then repeat the job we figured above four times instead of 
twice in a ten-hour day, or would turn out 2000 pieces and be paid 
for a day's work, at four tenths of a cent per piece, $8 (or double S4, 
which was "time"). But in the example before us the workman is 
entitled to five tenths of a cent per piece, a rate that contains a 
25 per cent bonus factor. So, then, if he turns out 2000 pieces a day 
instead of 1000 (through a saving of time of 50 per cent) he will 
earn $10 a day or "double time and a half," instead of the "time 
and a quarter" (S5) that he was supposed to be able to earn. It is 
evident, therefore, that a bonus factor as high as 25 per cent cannot 
be embodied in a piece rate with prudence, unless the time-required 
basis be predetermined very accurately ; and, in fact, so high a bonus 
factor would rarely be used where usual rate-fixing methods are 
employed. Also it is clear that with or without a liberal bonus factor 
the root of the difficulty with piece rate is miscalculation of the 
time-required basis of the rate. Errors in favor of the workman in 
estimating the time required are obviously costly to the employer 
and must often result in extravagant earnings. And when such ex- 
travagant, "out-of-line" earnings do occur, the next thing that hap- 
pens, of course, is that the piece rate is cut to reduce the workman's 
wages to what is reasonable. The opposite also frequently occurs 
by reason of the time required being estimated "short," entailing 
that under the rate established the workman cannot make even his 
"time." Piece rate is, in fact, a nicely balanced, unstable method 
of paying wages, requiring fine calculation and adjustment to give 
satisfactory results ; and under the prevailing hasty, inexact prac- 
tice the fine adjustment called for is made after the rate is set and 
"tried out" instead of previously as it should be. There are, to be 
sure, a considerable number of industries with well-established piece- 
rate scales changed infrequently. But generally speaking there is a 
vast amount of tinkering to correct the error of badly set rates. 
Raising the rates to make them right does little harm; it is the 
lowering or "cutting" of the rates which works mischief— a mis- 
chief that can hardly be exaggerated, for it means the utter de- 
moralization of the workman. 

i 'Mi 



Before we proceed to further discussion of the effect of rate-cutting 
upon the workman, let us first examine into the question of its 
justification. It is often alleged that an error of liberality in setting 
a piece rate is not costly to the employer, that he "doesn't lose any- 
thing by it," but even gains. Now of course if the employer had 
occasion to compare merely the performance and earnings of his own 
workmen in any class of piecework relatively to each other, it is true 
that the speediest and highest-paid man of the group would be the 
most profitable man. The labor cost per unit of his product is no more 
than that of the slowest, and the overhead expense per unit is much 
less. But the employer usually is compelled by competition to com- 
pare his pay roll as a whole with those of his rivals. He cannot keep 
on paying extravagant wages and continue in business. If his rival 
has guessed better than he has in setting his piece rates^ he must 
reduce his own so that the earnings of his men collectively will be in 
line with those of the rival. Moreover, the employer has occasion 
to make comparisons between different grades of piece-rate workers, 
and between workmen and foremen, within his own establishment. 
If some of his workmen are earning what is right by piece rates 
properly set and others are earning extravagant wages by piece rates 
that are improperly set, the effect will be jealousy and bickering. 
The earnings must be harmonized to keep the peace. Also it is a 
scandal, subversive of discipline and calling for remedy, when the 
extravagant piece-rate earnings of workmen cause them to have more 
money in their pay envelopes than the foremen have in theirs. It 
therefore comes about that as long as errors are made in estimating 
the time basis of piece rates, piece rates will have to be cut. This 
statement is central to the main argument of this paper. Piece rates 
by and large in industry will have to be cut : there are reasons — 
ample, controlling, permanent reasons. It is of no use railing at 
employers and their rate-setters for their alleged "stupidity" in 
cutting rates. It is of no use preaching up the Golden Rule to 
industrial managers as a remedy for rate-cutting. As long as rates 
are set as they usually are they will have to be cut. 

But, say the proponents of "scientific management," piece rates 
need not be "set as they usually are"; they may be and should be 
set by "time study," and then the rates can stand. Apart chiefly from 
overlooking the effects of competition in a changing world, this is a 



logical position. The idea is that by means of thorough standardiza- 
tion of the job, which always precedes a proper time study, and by 
the time study itself, the rate-setter ascertains in advance the amount 
of slack that can be taken up in doing the work and so discovers 
the exact time required. With that information he then sets a rate 
under which it is impossible for the workman to make extravagant, 
runaway earnings. Such is the confidence of scientific-management 
men in the accuracy of time study (together with overlooking or min- 
imizing the effect of changes in the competitive situation), that wher- 
ever piece rates are set by that method a definite promise is made 
in writing to the workmen on each job that the rate will never be cut, 
unless the job changes its character so that it becomes a new job. 

The present writer is a believer in time study and has had direct 
experience with it. He is of the opinion that it holds much promise 
for the future betterment of industrial relations. Nevertheless, it has 
its limitations and does not invalidate the position taken above, that 
in industry in general, in the future as in the past, piece rates will 
have to be cut. For one thing the expense of time study, properly 
performed, places bounds to its extension in the field of industry. 
Also the accuracy of its methods and the permanency of its results, 
under actual working conditions in industry, are not as great as the 
theory of the device calls for. Under time study, errors are made 
in setting rates, sometimes serious errors, and it is therefore a dan- 
gerous practice to make in good faith definite written promises that 
the rate will "never" be cut "unless the nature of the job changes." 
And this last qualifying clause in the agreement presents a large op- 
portunity for evasion on the part of the unscrupulous employer or 
his overzealous rate-setter. Anyone having the slightest acquaint- 
ance with the details of workshops kno.vs that no end of "nibbling" 
of rates can be introduced through the expression "unless the nature 
of the job changes." I am aware that the danger here is guarded 
against in genuine scientific-management shops by certain methods 
(the use of the so-called instruction cards), but these methods may 
fall into disuse through the carelessness of subordinates, and the 
honest purpose of the proprietor may not endure. In any shop 
after a time there may come a king who "knew not Joseph." In 
short, such is the effect of multitudinous details, technical and com- 
petitive change, carelessness, excessive zeal, and human greed that 




11 i ^ 


time-study methods cannot be depended upon to abolish rate-cutting, 
even where the expense of those methods does not preclude their 
use. Rate-cutting emerges from the nature of things industrial ; 
neither old nor new devices of rate-setting can secure the inviolate 
maintenance of piece rates. The protection of piece rate (removal 
of the chief evil connected with piece rate) must therefore come 
about not through vain attempts to abolish rate-cutting but through 
the adoption of appropriate methods of safeguarding the interests of 
labor when rates are cut. 

The effect of rate-cutting, as now practiced without safeguards, 
upon the individual workman directly affected and upon the whole 
body of workmen throughout industry is lamentable. Whether the 
employer does it arbitrarily and aboveboard, or whether he does 
it underhandedly by means of tricks and evasions, either way its 
primary effect is virtually to fine the workman for ingenious and 
speedy work (as it inevitably appears to him) and to bring it 
about that he and his fellows do more work (deliver more units of 
effort) for less pay. By reason of rate-cutting, as Sidney Webb has 
said, a "subtle degradation" goes on with respect to any standard 
rate, linking pay with effort, that the workmen seek to maintain. 
The secondary effect with respect to workmen is, of course, that they 
seek to safeguard their interests against this attack ; and they do so 
by means of a whole system of reprisals. The characteristic form of 
these reprisals is deliberate limitation of output — purposeful "sol- 
diering" in its various aspects. Also there is opposition to putting 
time work on piece rate where it should be ; and, furthermore, 
especially in England, there is opposition to proper analysis or "rout- 
ing" of work which would lend itself totheintroductionof piece rate. 
There are, of course, as already stated^ some establishments where the 
evil of rate-cutting has been at a minimum and where in consequence 
little limitation of output obtains. But the general situation in in- 
dustry, both with and without labor organization, is one of widely 
ramifying open or covert war against output, resulting in huge 
amounts of wealth-not-created. The evil of limitation of^utput is 
complicated with the lay-off evil (which has its own appropriate 
remedy) ; nevertheless its chief continuing cause is unsafeguarded 
rate-cutting. The more intelligent workmen know, of course, that 
slow-work practices are no part of a constructive program of advance 



for labor ; they do these things merely to meet the exigencies of the 
existing situation, as a counter-attack against an attack made on 

And the great waste of industrial power and loss of wealth to so- 
ciety, including the workers, is not the only serious aspect of this 
warfare originating chiefly in the cutting of piece rates. From the 
great mass of chicaneries and injustice, about evenly divided be- 
tween the two sides, emerges a lamentable and unnecessary degrada- 
tion of the human spirit. It hurts all honorable workingmen in their 
self-respect to practice limitation of output. Moreover, the bitterness 
that prevails in workshops between the workmen with the spirit of 
solidarity and the crass individualists, or so-called "piece-rate 
hogs," is most regrettable. As one experienced and conservative 
labor spokesman, Mr. Portenar, has said: "A man shows his naked 
soul when he works at piece rate." The "chasers" and other stool 
pigeons that many employers use in their efforts to circumvent the 
reprisals of labor increase the sum of hatred in the world in a way 
that is not necessary to get the world's work, rightly ordered, done. 
A workman has a right to a decent life in industry, and society pays 
if he fails to get it. 

And now to come to the conclusion of the whole matter. It is 
absurd for society, itself so large a sufferer, to let industry go on 
muddling in the slough of this piece-rate difficulty unaided. With 
hundreds of millions, possibly billions, of lost wealth at stake, in- 
convenienced by strikes and other contingent evils, it is absurd for 
people at large to allow the parties in direct interest to "fight it 
out" in a war that has no ending. Society has pursued the hands-off 
policy in the past doubtless because it was thought that, such was 
the mass of details involved, the state would be incompetent to 
intervene to advantage. Also the serious difficulty and danger of gov- 
ernmental interference in any economic matter involving supply and 
demand has been appreciated. But it is clear that the state is com- 
petent to intervene in this matter of piece rate to advantage, avoid- 
ing the details and the ultimate economic determinations, by laying 
down fundamental rules of method and procedure. That is what 
the general body of commercial law does, and all it does. Why should 
industry in the aspect before us be allowed to continue to be a bear 
garden? Organized society, the state, should add to its concepts 





of law and conceive every industry to be "affected with a public 
interest," and enact appropriate regulations accordingly. Piece rate 
should be protected by law based on a general policy, as indicated 
above, of prescribing forms of procedure. No direct interference 
with matters properly determined by supply and demand (such as 
the base time wage) ought to be undertaken; simply the substitution 
of deiinition and publicity for indefiniteness and secrecy. 

Let it be enacted into law, and the means of enforcement pro- 
vided, that in every shop where piece rates are used : 

1. A list of rates shall be published showing not only the rates 
themselves but the "elements" from which they are derived — the 
definition of the job, the time-required basis, the base time wage, 
and the amount of the bonus factor. 

2. A statistical accounting shall be kept of the earnings (or per- 
formance record ) of the individual workmen under each rate, and 
audited at stated intervals. 

3. A statement of the period during which each rate shall stand 
without revision downward shall be made a part of each piece-rate 
agreement and published. 

4. The rules of revision, or the limit to which revision downward 
may take place, shall be stated in sufficiently explicit terms and 

For example, under the last head, if at the stated time of revision 
it shall be found that the average earnings of a group of workers 
on a certain piece rate have been "time and two thirds" (or some 
other predetermined amount) the rate may be cut, but only to a 
point that will yield the average worker "time and one third" (or 
some other predetermined amount) as shown by the average of the 
performance records. That is, the new, reduced rate shall be so set on 
the basis of the average speed attained by the group that a certain 
standard of pay is safeguarded. Contrariwise, at the stated time of 
revision (or between times) any rate that is found to yield average 
earnings below the standard of pay aimed at shall be revised upward. 

A somewhat elaborate code will have to be developed to protect 
the interests of the employers as well as those of the workmen in 
the application of the foregoing principles. The principles or leading 
rules themselves will require amplification. For one thing, there is 
the problem of what to do with small groups or single workers where 




the law of averages is not available. In such cases there should be a 
lump-sum payment in compensation for loss of earnings when a piece 
rate which yields extravagant wages is reduced. The method em- 
ployed might be capitalization of the excess earnings considered as 
an annuity on the basis of some predetermined rate of interest. Then, 
again, there is the question of what procedure should be followed 
when, as often happens, a high-grade piece-rate workman is tem- 
porarily placed on a low-grade piece-rate job. The rules for such 
special assignments should be predetermined and published. A special 
higher rate for the job cannot (without creating jealousy) be offered 
in such cases for the benefit of the particular workman ; his custom- 
ary earnings must therefore be safeguarded by calculating how much 
he ought to earn with due diligence by the established rate and then 
adding to this a fixed time-wage retainer. To illustrate : his custom- 
ary piecework earnings per hour are 50 cents; what he can be 
reasonably expected to earn per hour at the temporary piecework is 
30 cents ; the guaranteed hourly retainer, which he would supple- 
ment by his own efforts, would be 20 cents. Where such a retainer 
is not paid in these cases, usually the workers "soldier" to a degree 
(as I have myself seen) which is the despair of foremen. Workers 
always resent injustice in wage matters and commonly endeavor "to 
get even," although with honorable employers of course no injustice 
is intended. The rules of order and publicity suggested above would 
be opposed by many employers, and yet undoubtedly they would be 
to the advantage of employers as well as wage-earners. It is to 
the interest of everybody that ways and means be found, as they 
can be, covering all circumstances to encourage piece-rate workers 
to do their best. These ways and means will not be found by the 
general mass of managers of industry working without assistance. 
The chief practical difficulties in a general plan for protection of 
piece rate will be those which will arise from the necessity of estab- 
lishing proper uniformities and proper diversities in piece-rate scales 
as between one shop and another in the same district and as between 
different districts for a whole national industry. Here, again, I think 
the state should require published rules of procedure, but these rules 
would have to be arrived at through organized employers and or- 
ganized employees freely using the methods of collective agreement. 
As for that matter, the whole body of rules suggested above for the 




protection of piece rate, primarily in the workers' interest, will have 
to rest ultimately (although the state takes the initiative) upon the 
basis of unionism and the practice of collective bargaining. Not only 

must all the cards — not some of them, but all of them be placed 

on the table to protect piece rate in the workers' interest, but also 
the workers must have adequate control as to what those cards shall 
be. The representatives of the organized workers should inspect 
the methods of determining the time required on piece-rate jobs • 
they should pass upon the bonus factor ; they should audit the record 
of earnings ; and above all they should have a say as to the base 
time wage embodied in each piece rate. The labor organization and 
the mechanism of collective bargaining and representation sufficient 
to perform these tasks (not merely to satisfy labor but because logic 
and right reason demand it) will have to rest on a broader basis than 
mere individual workshop boards or committees. To solve the piece- 
rate problem, and all the other problems of industrial life, there 
must be indeed unionism broadly established and recognized and sup- 
ported by society. Society must realize that the manifold interests 
of working men and working women in every shop cannot be ade- 
quately protected unless they appear before their employers by 
counsel. The outsider, an official of the intershop union, is not 
strictly an analogue of legal counsel (he brings his own interests into 
the case) : nevertheless that term is useful as indicating the nature 
of the function of expert assistance which he renders his clients in 
any shop. The workingman, when engaged in buying his wage by 
the exchange of his mental and physical effort, often needs to be 
coached as to his demands, and he has therefore the occasion and 
the right to employ counsel to examine into all the conditions of 
the deal and through him to state what terms he is willing to accept. 
And not only should the workingman have the right to do 
business with his employer by counsel (through the official of his 
union) but he should actually do so. Therefore, in the absence of a 
union (as is often the case, especially with women workers and the 
sweated trades generally), the state itself should appoint such coun- 
sel, similarly to what is often done in criminal trials. Is it not 
absurd that in the multitudinous industrial cases, so vastly im- 
portant in the aggregate, hundreds of thousands of workers who 
most of all need expert defense are left without any ? The hands- 



off policy, the "let them fight it out" policy in these matters must 
be absolutely abandoned, not merely in the interest of the workers 
but in the interest of the employers and of all of us. Of recent days 
events have brought a condition under which industry will profit 
greatly by a speedy introduction of the "common rule" mto all 
matters affecting remuneration of labor and other conditions of em- 
ployment. Employers, legislators, courts, all of us, should get some 
new concepts with respect to labor organization and labor standards 
and act upon them without delay. Order should be introduced mto 
a realm where hitherto there has been anarchy. 

These last matters are to a degree collateral to the proposals made 
above for compulsory rules of procedure and publicity with respect 
to piece rate. Further discussion of them is therefore out of place 
here What I wish to emphasize now is that, however necessary 
collective bargaining may be as the basis of adequate protection of 
piece rate in the 'worker's interest, published rules of procedure re- 
quired by law as set forth above are also necessary to the protection 
of piece rate in society's interest. So long as the methods of piece 
rate are left in an undefined, chaotic condition there is grave danger 
that collective bargaining operating under such conditions may 
seek to solve the tangled problem in reactionary and harmful ways. 
It is abundantly clear from evidence published of late that in the 
engineering trades in Great Britain, for example, organized labor 
has protected piece rate not by intelligent regulation but by stub- 
born opposition to its introduction and by outrageous practices of 
limitation of output. The whole situation was apparently too con- 
fused to admit of intelligent regulation ; there was no foundation or 
preparation for the proper exercise of the forms of collective bar- 
gaining What is needed everywhere first of all, therefore, to prevent 
such things from happening is the letting in of the light, the opening 
up of the subject for proper handling, by the laws suggested, which 
will compel the piece-rate accounting, the publication of the scales, 
the definition of the jobs, and in short the whole analysis of the 
piece-rate problem into its "elements." Then upon such a basis can 
come the follow-up of collective bargaining properly applied, and, 
when necessary, public arbitration intelligently applied. 

Charles W. Mixter 

Clark College 

rrfffi^ I 







THE basis of all "nonfinancial incentives" is interest in work. 
jntere stuTwofk: implies a destre to pro^ce actuated by rnler- 

nal motlveslitlier than external discipline. ' 

Production means creation, and the industrial creative function 
in man is a mental process and lies in his intelligent adaptation of 
means to ends. It is useless, therefore, to look for real creative 
work unless the workman has a chance to think and to plan ; any 
other working environment either fails to attract or actually repels 
the workman, and as a consequence offers no incentive to increased 

Work which does not call for thoughtful reflection, and which 
uses only muscular effort, tends to draw man down to the level of the 
brute and makes for industrial irresponsibility and consequent social 
disorganization. The unthinking man cannot be a responsible man. 

It is the self-conscious faculty of man which distinguishes him 
from the animal and makes him above all a creative center through 
which the universal life-giving power can deal with a particular 
situation in time and space. 

To use a homely illustration with which everyone is familiar, 
the traffic at each crowded street crossing cannot be regulated from 
the City Hall ; it requires an individual (the traffic policeman) in the 
congested spot to deal with each particular situation as it arises, 
and upon his powers of observation and selection depends the orderly 
flow of traffic. 

J iJs only through the individual life that the universal life can 
act, and therefore the universal is compelled to evolve many'lndi- 
vidual lives if organization and order are to replace the unorganized 
state represented by the purely generic operation of natural law. 

T he problem of so dal o rganization is, then, how to organize 

iprom Publications of the American Society of Mechanical Engineers, 
No. 1673 (1918). 


society upon the basisof respect for the individual. This is also the 
iMustrTaT problem as well, lor industry in the broadest sense is 
society in its highest form of activity, because it is essentially con- 
structive and therefore creative activity. 

It was an inevitable corollary to the universal plan of creation 
that the individual life came into being not to create material sub- 
stance, as that had to be before individual life could gain conscious- 
ness. The function of the individual life, however, is to create by 
a thought process conditions especially selected to produce results 
which nature unaided would fail to produce. 

This is what the horticulturist does. His power lies in his knowl- 
edge of natural law, and his creations are made possible because he 
conforms to the law. The uncultivated orchard reverts to its original 
wild state when no longer attended by man, but increases in pro- 
ductiveness by continued thoughtful application of man's power of 
selection and adaptation. 

It is by a similar process of conscious selection that such devices 
as the steamboat, steam engine, electric generator, and the telephone 
came into existence. They did not come into being and never would 
have been created by the generic operation of nature's laws. 

To illustrate further : The desire of the savage to cross a body of 
water too wide for him to swim caused him to observe the floating 
of things which floated naturally. As a result of this observation he 
built a raft ; and finally, by further observation, he discovered the 
principle that anything which, bulk for bulk, was lighter than the 
water it displaced would float, and although he perhaps uncon- 
sciously applied this principle, it is true that from its application 
he evolved the canoe. 

It is by a continuation of the application of this same law that, 
almost within our own memory-, it has been made possible for the 
vessels of the world to be built of iron, something which the old 
shipbuilders thought impossible. We see then that it is the applica- 
tion of the personal factor that now makes iron float by the use of 
the very same law that makes it sink. 

Upon a higher plane the modern electric generator was evolved 
by observing that a wire passed at right angles through a magnetic 
field would induce an electric current to flow through it in a certain 




It was only by creating, through the application of the personal 
factor, conditions by which this law could be expanded that electric- 
ity was generated commercially. The electric generator is nothing 
more than a large number of such wires, insulated one from another, 
passing in and out of a number of magnetic fields, plus a device 
for collecting and conducting away the current generated. The 
important point to remember is that there never would have been 
an electric generator without the introduction of the individual 
personalities who literally created it. 

In this connection it is well to observe that all of our creations, 
if they are to be successful, depend upon the strict observance of the 
laws of nature. When we clearly see man's place in the universal 
life movement, we can understand why it was that in the long process 
of evolution it was inevitable that a being capable of measuring by 
reflection be evolved. The very word "man" is derived from an 
Aryan root meaning "to measure." 

All this may seem at first sight far removed from the problem 
of "nonfinancial incentives," but it seems to me it is necessary before 
proceeding further to gain some conception of the reason for man's 
existence. The concrete illustrations of the operations of non- 
financial incentives will then have greater meaning, 

Man, through the exercise of his intellectual faculties so laboriously 
acquired through ages of slow evolution, literally reflects the uni- 
versal creative process upon the plane of the particular. There can 
be no organization of material substance except through an indi- 
vidual who can observe the laws inherent in the materials them- 
selves. Then, by a process of reflection, these materials can be 
organized into forms which they could not take unaided by the in- 
dividual will or a power external to themselves. 

To state the matter more concretely: man, we know, cannot 
bring matter into existence, neither can he create the force which 
resides in the physical elements he uses in the day's work ; what he 
does is to observe nature's forces in action and then, having learned 
the laws, that is, the reasons for their action in any particular direc- 
tion, he seeks for means to make them express themselves more 

This, of course, necessitates the creation of conditions which do 
not occur spontaneously in nature. We have here the beginning 




of what we call the artificial, and it is significant that the highest 
type of this form of creation, upon a higher plane than the natural, 

is termed art. 

This creation of artificial conditions which, taken all together, 
we call civilization is of course the product of man's organizing 
power. While self -consciousness, the power of realizing the self 
as apart from the rest of the universe, has been a human faculty 
for untold ages before the present highly organized state of society 
had been attained, it is nevertheless true that now, for the first 
time in the history of the white race, we are confronted with the 
problem of correcting the repressive or selfish character of civiliza- 
tion so that it will serve the mass of humanity. If we fail to accom- 
plish this it will be destroyed by the same creative power which 
brought it into existence. 

We must learn how to change the industrial environment from 
one which repels mankind to one which attracts. In other words, 
the incentive to work must be inherent in the nature of the work 


Now what are the conditions which we must meet in the industrial 
world to make work attractive? We have ample evidence that 
increasing financial returns have failed to stimulate productivity, 
and, on the other hand, the constant demand for shorter hours and 
the increasing labor turnover are proof that work in most of our in- 
dustries not only does not attract but actually repels the workman. 
We must therefore look into the working conditions themselves for 
the answer. This is the only scientific method of procedure. 

I should like to quote from a letter received from a very intelligent 
labor leader recently,^ to show how the mass of employees look at the 
problem and how urgent is the need for its immediate solution if 
we are not to have a greatly reduced production of the necessities 
of life brought about by the concerted action of the workers : 

Is it not true that the industrial evolution which has brought the 
trusts into existence has been the means of eliminating the " human 
touch" in industry ? During the days of small industrial plants the 
employer and the employee, of course, were really fellow workmen. 
At the present time, however, the employee has perhaps never seen 
any of the stockholders of the industrial plant where he is employed. 

ijohn P. Burke, International President, Pulp Sulphite and Paper MiU 
Workers' Union. 


J a 


You say that men can be productive only when they take an 
interest in their work, and they will not take this interest unless those 
intrusted with the direction of their efforts realize that they must 
teach them constantly how to exercise their creative powers. 

While I agree with everything you say relative to creative work, 
and have thought along these lines considerably myself, still, is it 
possible in industries as they are constituted at present to enable 
the average workingman to do creative work? Isn't it true that 
industry is becoming so specialized that the workman is no longer 
a creator? I realize that while it may still be possible for the 
workman doing certain jobs in the mill to do creative work, to a 
certain extent, still isn't the tendency of modern industry more and 
more toward making the workman simply an appendage of the 
machine ? 

In the paper you sent me you described how you designed a plan 
for the men operating the hydraulic press to take an interest in their 
work. This certainly is a practical illustration of what can be done 
and perhaps could be cited as a refutation of what I have just 
written above. I realize that there may be certain jobs in the mill 
where the creative powers can still be allowed to develop and where 
the workman may be given a chance to express his individuality, 
but the point I am trying to bring out is that the tendency of 
modern industry is away from creative efforts and gives the work- 
man less and less opportunity for individual development. When I 
worked in the factories, which I did from the age of twelve to 
twenty-five, one of the things I found the most dissatisfaction with 
was the deadening sameness of the work. I never remember a time, 
when working in the factories, that I became so interested in my 
work that I didn't long for quitting time to come. After leaving 
factory- work I got a job with a building contractor. As I became 
more proficient as a carpenter, I have time and again been put doing 
certain work that was more or less creative, in which I have become 
so interested that I paid no attention to quitting time and have 
worked for two or three hours after the time when I might have quit 
work. There is joy in creative work. But, in my opinion, no matter 
what schemes we may devise, modern industry is going to tend more 
and more to make simply automatons of men. 

I may say, however, that I could find very little to criticize in 
either of your articles. You have demonstrated, from practical ex- 
periments, things that I have often theorized about. The conflict in 
industry during the next few years, in my opinion, will be between 
the democratic and autocratic ideas. The autocratic idea, I think, is 
best exemplified by the German military machine. 

I was able to convince the writer of the letter from which I have 
just quoted that creative work could be done to a great extent in 



modern industry, and, further, that this could be accomplished with- 
out any radical changes in equipment, greatly to the advantage of 
both employer and employee. 


To do this, individual progress records are necessary, so that the 
workman can know from day to day how he is improving in the 
mastery of the process. 

The first example, illustrated by Fig. i, is from that branch of 
the wood-pulp industry known as the sulphite process and shows 
a cooking chart which was designed to give the cook information 
about the reactions in the digesters in which the wood chips are 
cooked in a 6 per cent solution of sulphurous acid partly combined 

with a lime base. 

The digesters have a conical top and bottom and are usually 
50 feet high by 15 feet in diameter. After the acid and chips are put 
into the digester and the cover is put on, steam is turned in at the 
bottom and the pressure brought up to 75 pounds per square inch 
above atmospheric pressure. 

As this does not heat the digester sufficiently to produce disinte- 
gration of the wood, it is necessary to relieve gas through a relief 
valve on the cover. Because of the removal of this gas, which is 
afterward reclaimed, more steam can come in at the bottom, and 
thus the temperatures are advanced. The skill in cooking consists 
in the proper control of the relief valve. 

Before the introduction of these cooking charts, illustrated by 
Fig. I, all this was left to the unaided judgment of the cook, with 
usually nothing to help him but a small hand thermometer and a 
pressure gage. Of course great variation in the pulp was the re- 
sult. The cooking charts, plotted by the cooks themselves, how- 
ever, helped greatly, as they enabled the quick visualization of the 
work. On these charts temperatures are converted to pressures for 
the reason that the pressure in the digester comes from two sources, 
one the natural pressure due to steam and the other due to the 
sulphurous-acid gas. The pressure, for instance, which would cor- 
respond to a temperature of 212 degrees would be o, or atmospheric, 
yet from the chart you will see that the gage pressure actually 



J n 





showed 75 pounds. The difference between o and 75, therefore, is 
caused by the presence of sulphurous-acid gas. As the cooking 
progresses the gas is naturally used up : first, by being relieved for 
the purpose of making room for more steam ; second, by the natural 



































(TOTAL 7.00 


(coMBrNEO ass 


Fig. I. Reaction in Digesters in which Wood Chips are Cooked 

combination of the acid with the organic compounds liberated during 
the cooking process. 

At the end of the cooking process the gage and steam pressures 
will naturally come very close together, as the greater part of the SO 2 
gas has been used. The gas-pressure curve is obtained by subtract- 
ing the steam pressure from the gage pressure. It is really a 



resultant of the other two. If it drops too rapidly the cook knows he 
is relieving his digester too hard and checks the opening of the relief 
valve. If it does not drop rapidly enough he knows he must open 
the valve wider in order to increase the relief. Of course the figures 
are taken from recording instruments which are checked daily to in- 
sure accuracy. Naturally an ideal cooking chart was soon formed, 
being the joint work of the cooks handling the digesters and of the 
chemical-research department. 

Immediately after the introduction of these charts a very marked 
increase in the uniformity of the pulp was noticed, and the cooks, 
while at first opposed to the new method of " cooking with a lead 
pencil," as they called it, soon learned to like their work much 
better, for the reason that they now had some way of visualizing 
the work in its entirety. In addition to more uniform quality of 
the pulp, the yield from a cord of wood increased something over 
5 per cent. 


We soon found that it was necessary to give some sort of continu-l 
ous progress record if we were to keep up the interest in the work, I 
because no man could carry in his mind anything but a general im- 
pression of his progress from day to day. Several good records for 
one day are only like so many good golf drives. They are a source 
of satisfaction at the time, but just as the score in golf denotes our 
real mastery of the game, so does the progress record measure the 
man's increasing mastery of his work, and we feel that it is one of 
the moral obligations of the management to keep such records for the 
individual workman. Without these records men will not think of 
improvements in the process, and they cannot be blamed for becom- 
ing indifferent. How long, for instance, would a superintendent or 
manager retain his interest in the economical operation of his plant 
if his cost sheets were withheld? We, as executives, must have 
quantity, quality, and economy records, otherwise our interest soon 
lags. Why, then, should we expect the workman to be interested 
when he is not furnished with a record which at least reflects one of 

these elements ? . \ 

Such records can be grouped under three main headings : quantity \ 
records, quality records, and economy, or cost, records. Quality ] 












records, which_occupy the middle position, are, perhaps, of the 
greatest importance, for they bring the indivTdual*5 intditgeftee- to 
bearllpoir the problem and as a consequence, by removing the ob- 
stacles to uniformity of quality, remove at the same time the obstruc- 
tions to increased output. The creative power of the human mind 
is, however, not content simply to produce the best quality under 
existing conditions of plant operation. The desire to create new 
conditions for the more highly specialized working out of the natural 
laws of the process demands expression, and this expression at once 
takes the form of suggestions for improvements in mechanical devices. 

This desire contains within it the germ of economic thought, 
which will unfold and express itself eventually in a request for cost 
records, and the organization that neglects its opportunity to satisfy 
this desire is overlooking one of the great avenues leading toward 
intelligent productive effort. 

Because of the interrelation of quality, quantity, and economy 
records, any complete record of individual progress must, of course, 
take them all into account. However, as this is not always practical, 
we have at least one of three ways of measuring progress always 
open to us. 

We keep a continuous progress record of the work which is mainly 
one of quality. By quality I do not necessarily refer to the quality of 
the material produced, as most of our records refer to the qual- 
ity of the work performed — in other words, the nearness to which the 
workman approaches the ideal standards which he has helped to 
form. The democratic cooperative forming of these standards by the 
joint work of the trained technician and the practical workman is 
absolutely essential, otherwise continuous progress will not be made. 
The whole plan must be really educational in nature, and to be so 
the records must record the natural laws of the process and the in- 
dividual's degree of control of forces in the material elements that 
he is using. The more factors that can be recorded, the greater the 
interest in the work. The reason for this is obvious. 

There are nine men cooking, the names posted in the order of 
seniority, with the highest monthly record on top. There are three 
foremen at the top of the record. Each of these foremen has three 
cooks under him, and their standing is made up by taking the average 
records of the men under them. In this way we are enabled to get 







not only the individual records of the men but the group, or team- 
work records as well. For the convenience of the department head 
in char-e a record is kept which shows the relative standing of 
the large, medium, and small digesters. This is irrespective of the 
men who are working on them. 

The total progress-record figures are made up of the temperature, 
color, time, and blowing records. The relative values that these 
have 'in the total record are shown at the top of each column, the 
total adding up to 100. There is but a small variation in^ the 
monthly-average column of each worker, and this is characteristic of 
all our progress records. It shows how great is the incentive when 
individual effort is intelligently recorded. 

The temperature record is obtained by taking half-hourly readings 
from the recording-thermometer chart, upon which a standard- 
temperature curve has been plotted, calling each reading which hap- 
pens to fall on the standard line 100, and a reading 20 degrees 
either side of the standard line o. This means that for each degree 
off of the standard, 5 points are deducted from the progress record. 

The color record indicates how near the men come to blowing the 
digester when the color of the liquor shows the proper amount of 
li-nin in the solution. The sample, drawn from the side of the 
digester, is compared with the standard color. To get a mathematical 
value for this factor a range of colors from a very dark to a very 
light was obtained, the particular shade which was taken as standard 
marked 100 and one shade either side 10 points less than 100. 

The time record is obtained by calling a certain time of cooking 
100 and taking off on each digester cooked one point for each 
minute above or below this standard. 

The blowing record is obtained by calling 30 pounds pressure 
100 (most of the cooking being done at a pressure of 75 pounds per 
square inch) and 60 pounds o, the idea being to get the pressure as 
low as possible before blowing the digester. 

It will be noted that the temperature value is higher than any of 
the others. This is because it is the most important element. The 
color record coming next in importance is given the next highest 

By an arrangement of this sort, by simply changing the relative 
value of the different factors it is possible to emphasize any particular 








phase of the work. The men willingly pay the greatest attention 
to the factor that has the greatest value, because it gives them the 
better record and because they know the reason for the change. 
For instance, if it is desired to emphasize quantity, we give a larger 
value to the time record and a lesser value to the temperature record. 
Production is then somewhat increased at the expense of quality. 

While I could give many illustrations similar to the one just given 
of our cooking operations, I will give only one final illustration of how 
economy-progress records meet with equally great response. In the 
plant where this system was developed were employed over 1200 
men, and perhaps half of these men had individual progress records 
and the rest came under some sort of group-progress record. In- 
variably the records proved themselves to be an incentive to greater 


Below is shown a foreman's detail job sheet which indicates the 
method we had for giving our maintenance foremen cost records of 
their work. It is obviously a difficult matter when dealing with main- 
tenance and construction work to give quality or quantity records, as 
the work varies so much from day to day, so the only kind of records 
we could give the men were records of cost. The original suggestion 
to give these records grew out of the fact that we gave to each oper- 
ating-department head a complete cost of operating his department, 
for which he was held responsible. As soon as he began to realize this 
responsibility, because all the repair materials were charged to him, 
he at once began to make intelligent criticism of the engineering 
department, and especially was he critical of the maintenance fore- 
man if he was wasteful in the use of materials. As a result of this 
the maintenance foremen asked the master mechanic if they could 
not have job costs showing how economically they were doing their 
work, as they had no idea of the value of materials that they were 
using. The foreman's detail job sheet shown is the result of this 
request. It will be noted that the job is fully described, the total 
cost for labor and material to date is given, as well as the cost of 
labor and material for yesterday. Then below is listed the itemized 
cost of all materials used. The men soon became educated as to the 
value of the materials they were using, and we noticed a great 




Fo«n No.a 



foreman's DETAIL JOB SHEET. 

John Laffin o_x. l/lofiS 



Name of Job ^risfall ZSS Hp. Hofors o n Coarse Screens 

in West Hill. 
Descr i ptio n , 

Electrical Dept.-Poivcr Wiring. 

nn+^?rfar-t-ed I/7//6 WorKedort 1- 

Labor C0S++0 Da+e 

Material Cost +0 Da+e 
Total Cost to Date ^ 

31. G- 




Labor "Cost Yesterday _ 
Material Cost Ye&terday 
Total Cost Yesterday _ 


6 41 


change in the amount of waste ; in fact, we had frequent cases where 
maintenance foremen would bring scales into the mill to make sure 
that the storehouse was giving them full measure of materials, and 
we were soon obliged to get up a system of giving credit for material 
returned to the storehouse, in order to help foremen keep down their 
job costs. This was in no sense a form of contract system, for all 
of our maintenance and construction men were paid by the hour and 
did not receive any 
more money for doing 
a job economically. 

Fig. 2 shows the con- 
crete results obtained 
by giving the cost 
sheets to the depart- 
ment heads and job 
costs to the mainte- 
nance foremen. It will 
be noted there was a 
rapid increase in pro- 
duction from 1908 to 
19 13, also a rise in re- 
pair material used as 
well as an increase in 
the cost of mainte- 
nance labor. The fourth 
curve, showing the 
amount of material 
used for each dollar 
spent for maintenance 

labor, is more or less a resultant of the two. The gradual rise 
from 1908 to 191 1 in this curve was due to the increased material- 
consuming power of the maintenance men because of the intro- 
duction of labor-saving devices, such as pneumatic and electric 
portable tools. There was a drop in these figures in 1912 and 
19 1 3, but we were unable to get a real thought of economy started 
in the plant until the departmental-cost sheets and job-cost sheets 
were started. These were put into effect first in the beginning 
of 19 1 4, and there was an immediate drop in the curve from an 





' "Long- Turn Elbows , 

4j lb. Solder, 
^-ifTi/pe £ Condulets 
4-lj"4Hole Porcelains, 
I Roll Oiled Lined, 
I Roll Friction Tape, 
16-100 Amp. Terminals, 






4 e>.4-i 

Fig. 2. Foreman's Job Sheet 




I i i 



average of about $2.15 worth of material spent for each dollar spent 
for labor, down to $1.55 in 1914 and $1.05 in 1915. 

That this drop is due to the greater economy and thought in the 
use of materials is indicated by the fact that our maintenance crew 
was not very much reduced, the saving coming almost entirely in 

the use of materials. 


o tj 


H c 
P X 




I. ^ 
.z a 

% I 

O < 

V ^ 

- i> 





8 £ C 150,000 
^t^A 100.000 



I 2 

•f JC »t- o 

'^ o c o , 

o 1. a. - * 

E 0) o 

^ 3 Q 




























1906 1909 19 

The drop in produc- 
tion in 1914-1915 was 
due to war conditions 
which were unavoid- 
able. It is a significant 
fact, however, that in 
spite of this drop in 
production the mainte- 
nance-material cost per 
ton of pulp was re- 
duced to approximately 
half the amount under 
the conditions of higher 
production during the 
two preceding years. 

In none of this work 
did we pay bonuses to 
a superintendent, de- 
partment head, or work- 
man ; our salaries and 
wages were high, but 
BH 191S payments were all on 
a m,onthly, weekly, or 
Fig. 3. Showing Concrete Results of Cost hourly basis. The in- 
creased effort, therefore, 
came entirely from a desire within the individual to be produc- 
tive. Of course this sort of creative effort produced great changes 
in operating conditions; we increased our yearly production from 
42,000 tons to 111,000 tons without adding to the number of 
digesters for cooking the pulp, or wet machines for handling the 
finished product, and we changed our quality from the poorest to 
the very best. 

t9li 1912 




Due to the intelligent suggestion which came from our men all 
over the plant we were able to make very radical changes in the 
manufacturing processes. Entirely new methods of preparing our 
wood, making acid, bleaching, etc., were created, all of which were 
paid for out of the earnings. 

I maintain that this was all the result of the freedom our men 
were experiencing because they were working in an environment 
which stimulated thinking. They had ample opportunity con- 
stantly to increase their knowledge of the underlying natural laws of 
the process and were therefore able to realize the joy which comes 
from a conscious mastery of their part of the process. 

This freedom to express one's individuality in constructive 
work according to law is the only real freedom, for freedom unre- 
strained by a consciousness of the universality of natural law leads 

to anarchy. 

We should never lose sight of the fact that the degree of con- 
scious self-expression which the workman can attain is in direct 
proportion to the ability of the organization to measure, for his bene- 
fit, the impress of his personality upon it. The most democratic 
industrial plant, therefore, is the one which permits the fullest possi- 
ble amount of individual freedom to each member irrespective of his 
position, and at the same time is so sensitively adjusted that it reflects 
immediately the effects of his actions. If his actions result in injury 
to others, he will see that as a part of the whole he himself must also 


I have made no attempt in this paper to touch upon our method 
of arriving at the proper financial compensation, as this is beyond 
the scope of the subject assigned to me. I feel that I should state, 
however, that in our mills in Canada, where the same scientific re- 
cording of operations is being developed, our wage rates are adjusted 
each spring after careful discussion with the representatives of our 
local labor organizations. This has proved to be a very just and 
satisfactory method, for the rates thus determined are really a con- 
sensus of opinion of both employer and employee, and once the wage 
question is disposed of, all are free to devote their energies to the 
intelligent solution of manufacturing problems. Constant agitation 
of the question of financial remuneration only detracts from the work, 
and our experience has invariably been that there will be plenty of 




incentive to productive effort if the working environment is such that 
the workman can express himself as an intelligent human being. 

Man is not an animal, but a free, self-determining mental center 
of consciousness, whose reason for existence is that the universal life 
may be able to deal with a particular situation in time and space and, 
by this means, be enabled to evolve a material universe organized to 
express the one great individual life of which we are all a part. 

In conclusion let me say that I am well aware that to some of you 
this may seem like pure philosophical speculation, far removed from 
the practical affairs of everyday life. I have said nothing, however, 
that I cannot back up by any number of additional illustrations^ 
and my hope is that the examples given will stimulate others to 
make similar investigations, so that we can fulfill our mission in this 
country by evolving an industrial philosophy which will have for its 
ultimate aim the continuous unfoldment of the latent powers in man. 

New York 

Robert B. Wolf 


THREE problems of fundamental importance enter into indus- 
trial production : the material problem, the machine problem, 

the man problem. 

The last might be called the main problem, for it is the most im- 
portant of the three. It is also the most difficult to deal with, and 
the most neglected ; perhaps it is the most neglected because it is 
the most difficult. Yet on its proper solution hinges largely the 
success of an industrial enterprise and its capacity to maintain itself 
in competition with enterprises of similar character. 

All manufacturers can buy materials of approximately the same 
kind and grade at about the same price ; they can also purchase 
or, if need be, design and make, or have made, machines of like 
productive capacity and cost as compared with those used by their 
competitors. Moreover, they can study the successful manufacturing 
methods of another concern and adopt them in full or in part and 
improve upon them. Yet when it comes to securing and maintain- 
ing the personnel and effectiveness of an industrial organization, 
only intelligent effort through many years will enable one manu- 
facturer to attain advantages in this respect which another may 
possess by virtue of the efficiency of his human organization. 

Efforts to teach the young man^ whether young in age or experience, 
the knowledge or skill already acquired by his older brother are as 
old as mankind. With the social and economic changes which de- 
veloped during the centuries, the character of the problem varied, 
changing at first from the need of a purely vocational to that of a 
more pronounced scholastic training. 

During the last century, however, the vocational aspect again 
forged prominently to the front, especially in countries such as the 

iFrom an address substantially as delivered before the Association of Iron 
and Steel Electrical Engineers, June, 1916. Revised by the author, 1920. 







United States, in which industrial activities rapidly began to pre- 
dominate. The system of education had perforce to accommodate it- 
self to the new requirements. Thus the teaching of the mechanical arts 
developed on a large scale, and a marked impetus was given it in the 
United States by the industrial reconstruction period following the 
Civil War. As new industrial enterprises were started, and as older 
ones developed in size, their owners made it their concern to teach 
young men the practical work in which they themselves were engaged. 
Soon, under the influence of American genius, industry expanded 
at such a rapid pace that it became necessary to specialize in in- 
dustrial processes to a larger degree than ever before. Somewhat 
misled by the immediate results of specialization, which permitted the 
effective employment of many semiskilled and even unskilled work- 
men, employers came to believe that the need for well-trained 
all-round skilled mechanics was now less important, and they dis- 
continued to a large extent their efforts for systematic trade training. 
But these employers failed to consider that the greater specializa- 
tion of industry on the basis of wholesale production, and utilization 
of multitudes of workers, required a large number of highly trained 
men to lead and direct this ever-growing industrial army. They did 
not realize that the more complex machinery, through which speciali- 
zation was largely made possible, also called for a higher type of all- 
round mechanics to design, construct, and install this machinery. 
About that time, also, manual training was being introduced into the 
public-school system, and employers readily shirked their responsi- 
bility for the training of craftsmen by shifting it to the public school, 
without, however, any assurance that the schools would be able to 
develop quickly and effectively the required type of industrial 

American employers soon became disillusioned. The exhibition 
in Chicago in 1893 displayed the products of the mechanical skill of 
foreign nations so impressively as to awaken American employers to 
the necessities of the situation. Once more they realized that final 
responsibility for training skilled workers must rest upon them, even 
though they might, as they should, take justified advantage of the val- 
uable help which public schools could render. The thought was 
born anew among employers that only through the revival of the 
apprenticeship system, modified to suit new industrial conditions 


could the superior intelligent skill be secured by means of which 
they could fortify themselves against foreign competition. 

A number of examples of effective trade training in industry can 
be cited ; these, however, are only as a drop in the bucket when it 
is remembered that there are about 300,000 manufacturing estab- 
lishments in the United States, each with its need of skilled and semi- 
skilled workers. 

Most employers are giving but little heed to this pressing need. 
The average employer, not from necessity but because of thought- 
lessness or habit, still prefers to get workmen whom someone else has 
trained. But if he can be convinced by concrete examples that he 
can readily train his own skilled workers to meet the special re- 
quirements of his business, he will quickly sense his responsibility 
and, with the usual enterprise and acumen of the American business 
man, apply himself seriously to the task. 

It was in 1902 that the General Electric Company, employing at 
that time about 4000 men, established at its works at West Lynn, 
Massachusetts, a new apprenticeship system. This step was the 
outcome of a study of the reasons for the seeming failures of the 
then-existing apprenticeship systems. Briefly enumerated, these were 

as follows : 

Under the old form of apprenticeship a boy was taken into a 
shop and turned over to a foreman, who was expected to teach him 
the trade. The foreman, himself very busy in his regular duties and 
usually more adapted by experience and inclination to the production 
of manufactured materials than to the training of boys, would turn 
the boy over to an assistant foreman, who in turn would pass him 
down the line until he landed under the supervision of a mechanic, 
skilled 01- partly skilled as the case might be, but not often able to 
impart his skill to the boy. Frequently, also, the run of work in a 
shop was not sufficiently varied to give to the boy broad experience 
of instructive character. Even though the boy's superior might pos- 
sess the ability to impart to him his knowledge, and might also be 
able to give him such a varied assortment of work as to afford a broad 
opportunity to learn the trade, the apprentice was himself seriously 
handicapped by his own limited education. Employed at work that 
required the use of drawings, he could usually neither understand 
them nor could he make a simple mechanical sketch. If a mechanical 

; I 





operation required the use of mathematical formulse that were not 
included in his limited school experience, the apprentice would have 
to forego doing the higher grade of work that such knowledge would 
have brought within his range. The apprentice became, therefore, 
the victim of the daily or weekly requirements of the shop. 
^ To overcome these difficulties, apprentices were placed under spe- 
cial supervisors, whose function it was to transfer the apprentices 
from one department to another in order to give them an equal 
chance and a broad opportunity for training. To the extent to which 
the supervisor of apprentices could harmonize the point of view of 
the employer with that of the apprentice, he would fulfill his dual 
function with satisfaction ; but the practial conditions in the various 
departments often prevented the supervisor from doing full justice 
to his task. 

In the industrial struggle of today, quite different from that of 
twenty-five or fifty years ago, it is more and more essential for those 
who wish to rise above the average employee not only to be able 
to do their work well but also to possess an intelligent understanding 
of the work in which they are engaged and an imaginative outlook 
as to the possibilities for better and more efficient work. Many em- 
ployers fully sensed this situation and induced their apprentices to 
take evening courses at public schools and in other educational in- 
stitutions, but with only meager success, largely because the day's 
work was in itself as much of a task as the apprentice cared to under- 
take and partly because the boy was really too tired at the end of 
the day to do good school work at night. 

Realizing, then, that these factors were largely responsible for 
the failure of apprenticeship systems, the General Electric Company 
established in the Lynn Works special departments devoted exclu- 
sively to the training of apprentices, placed under the supervision 
of highly skilled men endowed by nature and by training with 
the faculty for teaching others. There are to be found within the 
big machine shops a small machine shop, and within the big wood- 
working shops a small patternmaking shop, set aside for training 
of boys under supervision of men well qualified for developing the 
boys' aptitude for such mechanical work. Readily accessible class- 
rooms were constructed, in which every apprentice is required to 
devote, but on full pay, a part of his working hours to classroom 


study and where, under competent instructors, he is taught those 
branches of technical knowledge that will assist him in attaining the 
goal of his mechanical or engineering ambition. At the same time 
an effort is made to develop in the apprentice an objective as well 
as a subjective point of view of the relationship between employer 
and employee, in order to impart to the growing worker greater 
loyalty to his work and to the man in charge of it. 

Apprentices in the training room are required to perform work 
of commercial character, which would have to be done by others in 
the factory if it were not done by these apprentices ; in this way it 
is aimed to train apprentices 'Mn industry for industry." 

The idea of maintaining special training rooms in factories was 
new. The value of training apprentices on commercial work, care- 
fully selected for its instructive character, lies in the fact that the 
elements of time, money value, and usefulness immediately impress 
themselves upon the mind of the apprentice, acting as a stimulus 
and incentive to him to put forth his best efforts. 

The other new idea was the introduction of classroom instruction 
into the factory. The Company insists that every apprentice receive 
mental as well as manual training, in order that skillful, intelligent, 
and loyal artisans, and not human automatons, will be developed. 
Realizing that an apprentice is entitled to play and to rest in the 
evening after a day's work, and that he would unwillingly go to the 
classroom if it meant a partial loss of his wages or a restriction of his 
time for recreation, the Company inaugurated the plan of giving 
the classroom instruction during the working-day and without loss 
of wage to the apprentice. 

The underlying reason for this procedure is based on the con- 
viction that most boys leave school as early as permitted and go 
to work, partly because school has become to them a drudgery and 
partly because they want to earn money. The apprentice-school 
studies are therefore made so interesting and are so correlated to the 
practical work as to attract the apprentice, and his wages are paid 
whether he is working in the training room or studying in the class- 
room. Otherwise most apprentices would go into the classroom not 
because they like it but because they must, and consequently they 
would not get the full benefit from the Company's educational effort ; 
they would have eyes but see not and ears but hear not. 




At first sight the comparatively large expenditure for salaries of 
classroom instructors and for wages paid to apprentices for non- 
productive time spent in classrooms would seem unjustified Ex- 
perience, however, has shown otherwise, for the added intelligence 
acquired in the classrooms makes the apprentice do more and better 
work in the shop. 

In respect to entrance requirements, any boy sixteen years of age 
or over, normally developed, with a pronounced desire for the trade 
which he wishes to learn and with a successfully completed grammar- 
school course, is eligible for admission as an apprentice. In a few 
instances boys are accepted who have not fully completed the 
grammar-school course but can give adequate reason for their incom- 
plete education. 

We know that many a boy who has gone only through the seventh 
or eighth grade of the grammar school, but for one reason or another 
did not or could not graduate, will develop into a far better mechanic 
than others who have completed a prescribed school course and have 
received a certificate of graduation. Yet, in dealing with large num- 
bers of apprentices it becomes necessary to deal with them in a fairly 
uniform manner. By insisting, therefore, on a completed grammar- 
school education as an entrance requirement, it is safe to start the 
educational program on the basis of such educational preparation by 
all apprentices. Moreover, we are thus assisting the public-school 
authorities in holding the boys to the end of the school course so 
that they may learn there, as they can better learn in the public 
schools than in the manufacturing establishment, the fundamentals 
of education and the duties of citizenship and may obtain, at least to 
a small degree, that general cultural background which adds so much 
m later life to the enjoyment of life itself. Aside from the selfish aim 
therefore, of obtaining a better educated class of boys, such method 
sigmfies an effort for cooperation with the public-school authorities 
on whose cooperation, in turn, we have to rely in the successful 
carrying out of our own educational work 

n.n'lll'T"'^''\''u "T"""^ '' '''^' " '"^^ P^"^d «f ^bout two 

months, during which they are closely observed to ascertain whether 
they possess the natural ability for the chosen work and have the 
moral stamina and general intelligence required to successfully com- 
plete the course. Only those vvho give satisfactory promise during 


the trial period are allowed to sign, in conjunction with their father 
or guardian, a standard agreement which outlines the conditions 
of apprenticeship. The apprentice is distinctly told that the agree- 
ment has no legal force and may be broken by him without fear of 
prosecution. He is made to understand, however, that the agreement 
is in the nature of a promise made by one gentleman to another : the 
Company, on the one hand, promising to teach the trade and to pay 
stipulated wages ; the apprentice, on the other hand, promising to 
give satisfaction in his work and in his deportment. 

Experience has shown that boys employed on this basis are 
more apt to live up to the agreement than if they were working under 
the impression that it is being used as a club to force them to con- 
tinue at work. The percentage of apprentices who "jump" the 
course after signing the agreement is remarkably low ; the average is 
considerably less than 5 per cent. 

As for apprentice wages, the company decided to pay remuner- 
ation from the immediate beginning of the course, even during the 
trial period, and to pay sufficient wages to allow boys from poor 
families to enter the apprenticeship department on a self-supporting 
basis. Gradually the wage schedule increased with the general in- 
crease of wages in industry, until now apprentices receive at least 
S5.50 per week at the start (increased in 1919 to $8.64), with 
periodical increases at the rate of from $1 to $1.50 per week for 
each succeeding year of apprentice training. A cash bonus of $100 
is paid at the successful termination of the prescribed training 
period, when the apprentice is also awarded a Certificate of Appren- 
ticeship, which entitles him to recognition as a full-fledged journey- 
man and outlines the course of training which he has successfully 


The apprenticeship period for grammar-school graduates is four 
years, except in the case of molder apprentices, who may finish their 
course within three years. Iron and steel molder apprentices, however, 
must be at least eighteen years of age to undertake this somewhat 
more arduous work and are in consequence paid somewhat higher 
wages. The apprenticeship period for high-school graduates is three 
years, and these apprentices receive wages beginning with $6.50 per 
week (increased in 1919 to $10) and increasing to Sn per week 
(increased in 1919 to $15.84). 






As far as business conditions permit, graduate apprentices are en- 
couraged to remain in the service of the General Electric Company. 
There is no fixed standard of wages for graduate apprentices ; each 
case is settled on its own merits. The average rate, however, is from 
$3 to S3. 50 per day (increased in 1919 to $5.60 per day at the start), 
with splendid prospects for advancement either in the service of the 
Company or in that of other industrial establishments. 

Contrary to general practice, the recruit in the apprentice depart- 
ment is not required to do ordinary chores, such as sweeping floors 
or running errands, but is immediately put at a machine or at a bench 
to perform simple mechanical operations which are strictly a part 
of the trade that he desires to learn. The apprentice in training 
might, for example, sweep the floors ever so clean and carry messages 
ever so quickly and yet be naturally unfit for the trade. It is there- 
fore essential to find out as quickly as possible whether the boy who 
wants to become a machinist has an embryo machinist in his makeup ; 
if there is no future machinist in him, it is of course futile to attempt 
to draw one out of him. The sooner this is definitely determined, 
the better for the boy and for the Company ; otherwise, both would 
waste valuable time, and the boy's progress would be retarded and 
his reputation injured if he should later be discharged for lack of 
natural ability. The stricter the process of weeding out during the 
trial period, the easier the subsequent task of training and retaining 

From a modest beginning in 1902, with one training room about 
thirty by forty feet in size and located in an available corner of 
an old factory building, the apprentice system has grown step by 
step and in keeping with the development of the Lynn Works, which 
now employ about 13,000 persons. Apprentice training rooms for 
machinists, toolmakers, and diemakers, for patternmakers and for 
foundry workers, are now located in Lynn. 

The training room for patternmakers occupies a space of about 
16,000 square feet, with an adequate equipment of woodworking 
machinery. The training room for machinists, toolmakers, and die- 
makers, located on the top floor of a modern factory building, covers 
a space 80 feet wide and 460 feet long, or an area of 36,800 square 
feet ; in it is a very complete equipment of the machines usually 
needed for the mechanic, and representing now an approximate 


investment of $250,000. All rooms are well lighted and ventilated 
and are kept as clean as factory work will permit. The influence 
of the clean and orderly shop develops in the apprentice the tendency 
to personal neatness and cleanliness as well as orderly habits about 

his machine or bench. 

All machines are of modern type ; all are motor-driven and prop- 
erly safeguarded. Similar conditions prevail in the training room 
for patternmaker apprentices and, indeed, in all of the apprentice 

training rooms. 

In each apprentice department a wide variety of work is done 
and a broad range of machines is provided with which to do it ; this 
excites the boy's interest and gives him an extensive and valuable 
practical experience. There is no hard and fast rule to govern the 
time during which an apprentice shall be trained on one kind of 
machine or on one class of work ; this depends on the ability which 
he shows and, to some extent, is controlled by the character and vol- 
ume of productive work which the department can secure. Generally, 
however, satisfaction is attained when an apprentice can do the re- 
quired work with absolute commercial accuracy and a fair degree of 


In regard to accuracy of work, it is only fair to demand of the 
apprentice the same exactness as engineering and commercial re- 
quirements demand of the regular workers. If, from an engineering 
standpoint and from that of economical manufacture, two holes 
theoretically two inches apart from center to center can vary in their 
location by one thirty-second of an inch one way or the other without 
interfering with engineering efficiency, then any relative location of 
the two holes within two inches plus one thirty-second of an inch 
and two inches minus one thirty-second of an inch will be satisfactory 

commercial accuracy. 

When an apprentice has learned to perform a particular operation 
quickly and accurately, he is often required to help in the training 
of another apprentice who has not yet advanced as far as he. He is 
made a leader in what is called a "team"; that is, he becomes a 
boy teacher of a boy pupil. The system disregards the age and 
service period of an apprentice ; the more capable teaches the less 
capable, even though the latter is older. The boys are thus taught 
to respect the skill of those who have gained greater proficiency. 

M^ ^- 




When the boy teacher has taught the boy pupil to understand the 
work and to do it accurately, the boy teacher is promoted to a 
different class of work, most likely in the capacity of a boy pupil to 
a yet more proficient apprentice. 

By this team practice the supervisory capacity of six skilled adult 
instructors is expanded to meet the needs of some two hundred 
apprentices grouped in one training room. In many respects better 
results are thus obtained than if the instructors personally supervised 
each apprentice, for the boy teacher comes into closer relationship 
with his pupil. At the same time the executive ability of the boy 
teacher is developed, and the importance of accurate workmanship is 
indelibly impressed upon him as he strives to impress it on another. 
This method trains for future foremanship those apprentices who 
have native though undeveloped ability for handling men and super- 
vising their work. Moreover, by this arrangement it is readily dem- 
onstrated how much ability and willingness to learn an apprentice 
possesses, for the boy teacher whose advancement is retarded by a 
slow pupil is quick to complain of his pupil's failure to grasp mechan- 
ical details or of his lack of interest in the work. If the complaint 
seems justified and is not due to the boy teacher's fault, the regular 
instructor endeavors by personal attention to stimulate the apprentice 
pupil. Sometimes he succeeds, but more often he confirms the boy 
teacher's judgment and is obliged to discharge the apprentice com- 
plained of. 

An important part of the work in electrical manufacture has to 
do with the winding of coils, fields, armatures, and similar parts. 
Skilled winders are not plentiful ; rapid expansion in the use of 
electrical power in industry and in public-service work is creating 
a greater demand for them. With this thought in mind the General 
Electric Company endeavors to train some apprentices in this 
particular line of work. Usually boys with a high-school educa- 
tion are employed to learn to wind armatures and fields and 
to test them for commercial use; they also strip and rewind 
defective fields and armatures, a particularly instructive practice for 

The time spent by apprentices in their respective training rooms 
amounts to about half the total period of apprenticeship, and varies 
somewhat with the capacity of the apprentice and with productive 


conditions throughout the factory. Apprentices who have made 
good progress in the apprentice training room are often lent to 
foremen in factory departments, provided the work proposed offers 
educational value that fits into the schedule of the apprentice course. 
Generally, however, the entire last half of the apprentice course is 
spent in factory departments, where the apprentices gain enlarged 
experience and come in contact with many skilled workers. Yet the 
apprentice always remains under control of the apprentice superin- 
tendent and continues the prescribed daily classroom studies. If 
an apprentice loafs or lowers his usual standard of work or deport- 
ment after he has been transferred from the apprentice depart- 
ment, he is usually brought back to the training room to serve a 
discipline period before he* is allowed to return to the factory 
department. One dose of this discipline usually cures. 

Previous to the establishment of training rooms for apprentices 
foremen did not favor taking apprentices, because they were a care 
—white elephants, so to speak ; they now prefer partly trained ap- 
prentices to many of the men from outside who claim to be full- 
fledged mechanics. 

The apprentice training rooms are beehives of activity and models 
of clean and orderly workshops, equipped with various makes and 
styles of standard machine tools and appliances required for 
practical training and economical production. It should again be 
emphasized that all work done in these departments has a commercial 
value either for production, equipment, or repair purposes. Nothing 
is done merely for the sake of following pedagogical precepts or to 
make a fine exhibition of work. It is the eminently practical char- 
acter of the training system which has its most wholesome influence 
upon apprentices and appeals strongly to them. 

The same practical policy applies to all classroom work. The 
courses of study are carefully planned, first to conform to the ap- 
prentices' mental capacity, as denoted by previous school education, 
and second to teach those sciences that definitely dovetail into the 
operations to be performed in the chosen field of work. Grammar- 
school graduates start at the lowest rung of the ladder, while high- 
school graduates receive more advanced instruction, particularly in 
mathematics, mechanics, mechanisms, thermodynamics, magnetism, 
and electricity. 




Every apprentice is required to pursue classroom studies for an 
hour and a half every day except during July and August ; during 
these months the classrooms are closed in order to give apprentices 
and instructors an opportunity to take a short vacation. The prac- 
tical work in the training rooms, shop departments, and drawing 
and testing rooms, however, continues without interruption through- 
out the year. For the convenience of the various training rooms and 
shop departments, classroom attendance is distributed over the day, 
some apprentices starting ^t the beginning and some toward the end 
of the forenoon, others at the beginning and the balance toward the 
end of the afternoon. In order to segregate at frequent intervals 
the more capable from the less capable apprentices as far as the 
school work is concerned, the school year is divided into three 
periods ; advancement from one class to the other is dependent on 
satisfactory daily performance as well as on the results shown at 
periodical examinations. 

The endeavor is to make the instruction concretely applicable to 
the practical work which the apprentices perform. Whenever possi- 
ble the instructors speak in terms of materials and machinery, 
facilitating the understanding of the apprentice by exhibiting the 
objects to which they refer. The opportunities for doing this are, 
of course, excellent in the large establishment located at West Lynn, 
with its great variety of manufactures. High percentage record of 
an apprentice is a secondary object, although from an organization 
standpoint it may be a necessary one; to make the apprentice 
understand, to make him think, and so to give him an industrial 
understanding, and to impart to him pertinent information and 
develop in him a general intelligence as well, is the paramount aim 
of the instruction. 

Apprentices who have had a grammar-school education only and 
are trying to fit themselves for skillful molders, machinists, pattern- 
makers, instrument-makers, steam fitters, and the like are first 
taught the mathematical sciences as they relate to arithmetic and 
algebra, mensuration and plane geometry, and are also given an in- 
troduction into trigonometry. Abstract teaching is avoided as far 
as possible. As an example, the instructor does not call merely on 
a boy's memory by asking him to tell how much four times three 
times six is, but rather puts the same problem to him in its 


application to industrial conditions by asking him how much electri- 
cal energy, expressed in certain units, is required to light a factory 
consisting of three workrooms, in each of which there are four arc 
lamps, each requiring six amperes, or units, of electricity for proper 
operation. In stating the problem in this way the apprentices are 
briefly told what an arc lamp is, are shown such a lamp and have its 
operation explained to them. They are also told briefly the meaning 
of an ampere as a unit of electrical measurement. 

In the teaching of mensuration much emphasis is laid on the 
figuring out of surface space of floors, roofs, and walls, and of the 
weights of machine elements and materials. The teaching of trigo- 
nometry proceeds along similar lines, but, while all other appren- 
tices are required to learn trigonometric functions and the solution 
of trigonometric problems, molder apprentices, on account of the 
shortness of their apprentice period and because their work would 
ordinarily not require such knowledge^ are excused from this particu- 
lar study ; some, however, take it at their own request. 

The teaching of mathematics and especially of mensuration en- 
ables apprentices to become acquainted with the very practical prob- 
lems which they will meet later on as skilled mechanics, as foremen, 
superintendents, and engineers. 

Another branch of the classroom work concerns itself with in- 
struction in the elements of mechanics ; the essentials of power trans- 
mission as it relates to pulleys, belts and chains, and to gearing ; 
the mechanics and strength of materials, a knowledge of which will 
develop a better understanding of the characteristics and uses of 
materials of construction and how to calculate the required strength 
of a machine part under given conditions of load ; and, in a brief 
outline, the prime movers as they utilize air, water, steam or other 
vapors, oils, or electricity as their motive force. Again, molder ap- 
prentices take only that part of the program which falls within their 
allotted apprentice period ; and unless it is done at their request, 
they do not get instruction in magnetism and electricity, which in 
its elementary treatment is taught all other apprentices. Advanced 
electricity is given only to high-school graduates. 

In all these subjects, so far as possible and practicable, problems 
relating to the industrial life of the apprentices are selected ; with 
many of these problems the apprentices have come in contact in 





:i 1 





their work in the foundry and shops, and the solution of many 
more will be required of them later on when they have become 
skilled mechanics, foremen, or superintendents. 

A very important phase of the educational work relates to the 
teaching of mechanical and freehand drawing and of tool designing. 
The apprentices are first taught the use of drawing instruments in 
the making of straight and curved lines and combinations of the 
same and then are taught projection. In its further development 
the course teaches how to copy and later how to design simple and 
more complicated elements of machines and mechanisms. Special 
attention is directed to the necessity of proper dimensioning of 

This instruction is not for the purpose of making mechanical 
draftsmen of the apprentices, although some with ability for such 
work will naturally graduate into positions as draftsmen and de- 
signers ; it is, however, considered essential as a foundation for 
developing the ability of correctly reading and understanding me- 
chanical drawings in accordance with which shop work is to be 
performed. Mechanical drawing is also a prerequisite for the subse- 
quent instruction in tool designing. Much emphasis is laid on the 
teaching of tool design, for it is realized that good ability to design 
jigs, fixtures, and other auxiliary tools for economical manufacture 
of parts reacts upon and stimulates good ability in correctly de- 
signing the parts themselves so that they can be readily machined. 
Before this work is taken up apprentices are given a brief course in 
freehand sketching, in order that they may acquire the art and ability 
of expressing themselves quickly on paper in the language of the 
technical man. The art of good and quick freehand sketching, so 
much needed by the mechanic, the foreman, the superintendent, the 
designer, and the engineer, is all too frequently lacking or only in- 
sufficiently developed in these men. 

Talks of a practical nature on subjects closely related to their 
shop training or to matters of allied interest are frequently given 
to the apprentices. In a particular case the superintendent was 
exhibiting a wrongly sharpened tool which he had found in use by an 
operative. The superintendent took advantage of this concrete in- 
stance of error to provoke a keen discussion of the right and wrong 
ways of applying mechanical principles to the cutting of metal, the 


object being to draw out the information from the apprentices them- 
selves rather than to offer it in lecture fashion. Other ^'practical 
talks" endeavor to explain natural phenomena, the practical appli- 
cations of which the apprentices know intuitively and accept as a 
matter of course without usually being able to explain them. Why 
should the temperature at the top of a high mountain be considerably 
lower than at its base, when the top is so much nearer to the sun, 
the universal source of heat ? Why should a one-inch drill, assuming 
for the purpose of discussion that it absolutely retains its size, drill 
a larger hole in cast iron than in steel ? Such questions are per- 
tinent illustrations of the practical character of the instruction, the 
one to show the effect of the density of the atmosphere, the other 
to bring out the grinding effect of pulverized cast iron as it crowds 

behind the drill. 

Practical talks, moreover, offer a splendid opportunity for the 
works physician to speak of the importance of personal hygiene, 
accident prevention, proper treatment of injuries ; and for superin- 
tendents, foremen, and department heads to explain special proc- 
esses of manufacture or methods of business procedure. 

High-school graduates who desire to become efficient draftsmen 
and designers, electrical testers and installation engineers, and tech- 
nical salesmen go through a three-year apprenticeship. They receive 
instruction in the Engineering School of the factory, based upon a 
completed high-school course. Their mathematics starts with alge- 
bra and comprises instruction in trigonometry and analytical geom- 
etry as well as an introduction to calculus. Special emphasis is laid 
upon advanced mechanical drawing and machine design, mechanics 
and mechanisms, thermodynamics, elementary electricity, electrical 
measurements, and the theory and operation of direct and alternating- 
current electrical machinery. The character of the instruction is 
like that previously described for grammar-school graduates, but 
is more advanced and intensified in degree, as is also the practical 
work, first in the machinist training room and then in the drafting 
and testing departments as well as in the engineering offices. 

The Apprentice School has nine terms, the Engineering School 
seven terms ; this makes it possible for the apprentices to complete 
their school work during the prescribed periods of apprenticeship, 
even if they should be held back in one or two classes. 






The Company is also concerned with the development of a cer- 
tain amount of social life among the apprentices ; it realizes that 
''all work and no play makes Jack a dull boy." One or two picnics 
in the summer, some dances during the winter, frequent informal 
meetings in the apprentice clubroom, an annual dinner for the Ap- 
prentice Alumni Association, are among the recreational activities 
encouraged by the Company. 

This brief description of some of the important features of the Gen- 
eral Electric Company's apprenticeship system, now extended to its 
factories in various parts of the country, is presented in the hope that 
it will stimulate active interest in one of the most pressing needs 
of industry ; namely, the effective training of an adequate supply 
of intelligent, skilled workers, who take pride in their work, whether 
it be that of a mechanic, or an engineer, or that of an executive 
supervising mechanics and engineers. At the same time it is hoped 
to make clear that what has been done by one large corporation on 
a large scale can be done as efficiently by smaller corporations on a 
correspondingly smaller scale. The same fundamental principles 
of training apply, and the same effective results can be obtained ; 
the smaller plants have simpler needs, which can be accommodated 
by simpler organization and equipment. 

When an employer or his responsible assistant has once grasped 
the importance of training "for industry in industry" and has 
learned to understand the fundamental lines along which an ef- 
fective system for the training of men must be developed, he will 
always find ways and means of translating his enthusiasm and 
determination into practical results. 

Magnus W. Alexander 

National Industrial Conference Board 



THE intensity of the industrial unrest of the last decade brought 
in its train numerous analyses of its principal causes. Among 
these the matter of the relatively low incomes of the working classes 
seems to rank first and foremost. To augment the workers' earnings 
without seriously disturbing the regular run of trade and industry 
has become the desideratum of students of labor questions, statesmen, 
philanthropists, and employers. In the opinion of a considerable num- 
ber of such public-spirited citizens profit-sharing furnishes one of 
the least costly and most effective methods of achieving the desired 

A question as to the meaning of profit-sharing immediately arises. 
The term "profit-sharing" has been extended in popular usage to 
include numerous gain-sharing or bonus schemes the essential char- 
acter of which places them outside of a correct interpretation of 
the term. Many of the schemes known as profit-sharing systems, 
although providing some supplementary remuneration to the regu- 
lar earnings of the beneficiaries, do not bear any direct relation to 
the actual earnings of the enterprise and cannot, therefore, be 
classified as involving the principle of profit-sharing in the proper 
sense of the term. As a matter of fact, very few of the methods 
adopted by American employers for the purpose of augmenting the 
ordinary earnings of their employees can properly be called profit- 
sharing as defined by the International Cooperative Congresses.^ 

iFrom Journal of Political Economy, Vol. XXVI (1917), PP- 1019-1033. 

2 The term "profit-sharing," strictly speaking, was defined by the Inter- 
national Cooperative Congress, held in Paris, France, 1889, as "an agreement 
freely entered into, by which the employees receive a share, fixed in advance, 
of the profits." The same congress defined the term "agreement" as covering, 
"not only agreements binding in law, but as including also cases where the 
agreement is only a moral obligation, provided it is honorably carried out." The 
term "profit" is to mean "the actual net balance or gain realized by the opera- 
tions of the undertaking." A "share" is stated to be "a sum paid to the 




Before proceeding any farther it is necessary to define exactly 
what in the following article is meant by the term. The under- 
standing of the writer is that profit-sharjng, in order to be genuine, 
must contain the follow ing; elements : ((p) a ggregates to be distn b- 
uted to the participants, or individual sHares^ are^ to depend princi- 
pally upon the earnings oi^the business ;^^^£^ the proportion of the 
earnings to "beHistributed isjto be definit ely determined in advanc e ; 
(3) benefitTof*the scheme are to extend to at. least one third of the 
ordinary wage-earnin[i or salary-earning employees. The formulated 
definition, although less rigid tTTan that of the Cooperative Con- 
gresses, excludes from the category of profit-sharing all schemes 
under which bonuses based upon individual efficiency are paidj usu- 
ally associated with the various phases of scientific management. It 
further eliminates from consideration actual profit-sharing schemes 
the benefits of which are limited to a selected few of the better- 
paid executive or supervisory employees. 

Different reformers (some students of industrial problems, as 
well as employers) have frequently addressed themselves to a con- 
sideration of profit-sharing with enthusiasm and hope. Profit-sharing, 
in the opinion of President Emeritus Eliot, of Harvard, may furnish 
one of the principal means for a satisfactory solution of the indus- 
trial strife of our present day.^ The effectiveness of such schemes 
in minimizing class conflicts, however, has never been appraised. 
Following the publication of the latest edition of Oilman's " Profit- 
Sharing between Employer and Employee" in 1896, no compre- 
hensive survey of the extent of genuine profit-sharing in the United 
States was made until recently. Such a survey now appears in one 
of the publications of the United States Bureau of Labor Statistics.^ 

employee out of the profits," such share to be "dependent upon the amount 
of the profits." The share given to the employee "shall not be indeter- 
minate"; that is, "it must not be a share which an employer fixes, at the end 
of some period, at his absolute discretion, as distinguished from a prearranged 
basis." The relative proportion of the total working force of a concern that 
must share in the profits in order to establish real profit-sharing conditions 
was stated to be "not less than 75 per cent." {Bulletin de la participation aux 
benefices, Paris, Tome XIX (1807), pp. 220-222, cited by D. F. Schloss, Methods 
of Industrial Remuneration, chap, xvii, London, i8q8.) 

^ Charles W. Eliot, " Profit-Sharing," in " Profit-Sharing and Scientific Man- 
agement" (four addresses. Efficiency Society of New England, Boston, 1914), 
pp. 3-9; also "The Road to Industrial Peace," The Nation's Business, August, 
1917, p. 16. 2 "Profit-Sharing in the United States," Bulletin No. 208. 

The precise nature of this report may be inferred from the fact 
that in the course of its preparation all profit-sharmg plants known 
olve been in existence were visited for the purpose of exarnmmg 
carefully the nature of the schemes in operation, the.r objects, and 
th results achieved. This study reveals the fact that there are at 
the present time in operation in the United States sixty genuine 
profit-sharing plans. The number of employees employed under 
profi -sharing agreements does not exceed thirty thousand-an m- 
Sficantly'small group when compared with the total wage-earmng 

population of the country. 

The existing profit-sharing plans are of comparatively recent 
origin only seven of them -or about one mnth -having been 
esabl shed prior to 1900. Twenty-nine -or almost one ha f-have 
been established since 19"- Over two thirds have been m opera- 
tion less than ten years. Of the latter group, twenty-one, or about 
one third of all, were put into effect in 1914, mS, and 1916- 
Over six tenths of the profit-sharing establishments are located m 
three states.-Massachusetts, New York, and Oh.o,-and more 
than one half of them are in the North Atlantic section of the 
country = The size of the twenty-eight profit-sharing establishments, 
as indfcated by the average number employed during a representa- 
tive period, reveals the fact that more than seven t«n*s of tho e 
reporting employed less than three hundred people and that ody 
sShtly over 10 per cent employed one thousand or ^re. O th 
thfrty-seven establishments reporting the proportion of the tota 
employed who participated in the distributed profits nineteen or 
SM per cent, reported 80 per cent and over parfcpaUng; thirteen 
or Is I per cent, reported 60 to 80 per cent participating ; four, or 
08 per cent, r^poned 40 to 60 per cent participating ; and on^y 
ol reported ;o to 40 per cent of all the employees sharing in the 

^'in'nine tenthsJiiJifi plans the principal prerequisite for participa- 

tionlrSr^mnanency of affiliation with the employing company, as 

shown by aspecific length of continuous service. The mmimum of 

ondnuous se^ice required varies from three months to hree years 

the length of time specified in more than one half of all the plans 

,U.S. Bureau of Labor Statist!.. Bulletin No. -« (.-■'>; P' '^ 
2/5id. p. 18. '^^^• 


I ■■ 

h . 



being one year or less. Thus practically ajl the plans exclude fro m 

confining the benefits to their more or less permanent employees' 
In about one eighth of the plans in operation employees, in order to 
participate, are required to file a written application especially pro- 
vided for that purpose. Such applications are usually perfunctory 
statements signed by the employees to the effect that they promise 
to do faithful work and be loyal to the company. In one instance 
employees obligate themselves contractually to share in the possible 
losses of the year's business in proportion to their earnings, but not 
to exceed 10 per cent. Under this plan 10 per cent of the weekly 
earnings of each of the participating employees is retained by the 
company until the end of the distribution period, when the amounts 
thus retamed are returned to the employees together with their share 
of profits for the year. In the great majority of the plans studied 
the basis for computing individual shares is relatively simple- 
namely, the amount 'of earnings of the participants. The individual 
^^y^^ ^"-gHgh instances are determined by dividing the employees' 
^art in the d i v isible fund by the aggregate of wages of the part'ici- 
pants m order to obtain what is usually called the profit-shariirg 
dividend, and then multiplyin g this dividend by t he respective earn- 
mgs of each of t he,:particjpants. " 

In all of the plans except one, discharge and leaving employment 
act automatically as causes for forfeiting the share of profits for the 
current year. Under one plan, only a discharge for cause results in 
forfeiture ; other discharges, being more in the nature of permanent 
lay-offs on account of lack of work, do not deprive employees of their 
proportionate share of the profits. Some of the plans under which 
shares of profits are paid in stock or in the form of savings accounts 
penalize those leaving employment more severely than those who are 
discharged, it being specified in these instances that those leavin- 
forfeit some part of the share of the profits of the previous year-! 
usually from one fifth to one third— in addition to the share of the 
current year's profit. The provision that death shall be a cause of 
forfeiture occurs only in about one half of the plans ; in the other 
plans it is specified that the pro-rata share of the deceased employee 
shall be paid to his family or dependents. In profit-sharing plans 


under which the shares of profits constitute some proportion of the 
dividends paid on capital the amounts of forfeited shares are usually 
retained by the employer. In other plans the amounts forfeited do 
not revert to the employer, but are apportioned instead among the 
participating employees. 

The majority of plans in operation specifically provide that em- 
ployees temporarily laid off but otherwise eligible to participate and 
ready to return to work upon call be not barred from participation. 
Their shares in such instances are based on their actual earnings. 
In one third of the plans cases of lay-off are treated *'each upon its 
own merits." The same treatment as that of employees laid off is 
accorded to those taken sick, provided the sickness does not extend 
"over an unreasonably long period" — usually not over six months. 
Under one plan only is it specifically stated that sickness of an 
employee carries with it a forfeiture of his share of the profits. In 
this instance, however, the company maintains a special fund for 
the benefit of its sick employees. 

Under thirty-two plans, or more than three fourths of those re- 
porting, the shares in profits were paid fully in cash. Five reported 
as paying in "part stock or savings account or common fund and 
part cash." Of these the following proportions were paid in cash: 
one, 99 per cent ; one, 90 per cent ; one, 85 per cent ; one, 80 per 
cent ; and one, 10 per cent. Under two plans the shares of profits 
were credited to a common fund, which was utilized for the accumula- 
tion of a pension reserve which was to be made up in equal parts of 
the shares of profits and contributions by the employees. 

The benefits accruing to the participating employees as a result 
of the operation of the profit-sharing plans during one representative 
distribution period, in terms of a percentage of the regular earnings 
of participants, are shown in the table on page 254. 

Under almost one third of the plans the profit-s haring div idend on 
the regular earnings "of the "parlicTpants wast ess^than 6^er cent. 
Slightly over one third of the establishments paid dividends varying 
from 6 to 10 per cent. The remaining third of the establishments 
paid dividends of 10 per cent or more. Of the latter, five establish- 
ments paid profit-sharing dividends of 20 per cent or more.^ 

lU. S. Bureau of Labor Statistics, Bulletin No. 208 (1917), P- i9- 


f ■ 

I ( ! 




Percentage of Regular Earnings received as Share of Profits in 
Thirty-four Profit-Sharing Establishments 

Classified Percentage of 

Earnings received as Number of 

Share of Profits Establishments 

Under 2 i 

2 and under 4 6 

4 and under 6 a 

6 and under 8 y 

8 and under 10 r 

10 and under 15 r 

15 and under 20 j 

20 and under 30 j 

30 and under 40 2 

40 and under 50 j 

50 and over i 

Total Ta, 

Three main reasons may be presented as accounting for the rela- 
tlyely ^low profit-sharing dividends paid under the plans. They ar e 
( i) the small proportions of their net profits that employers are ready 
to shaFeTT2)lTie rather large nuniLers bflSeneficiaries ; and (jTlhe 
method used in some of the plans in determining the relative interStT 
of employer and employees in the divisible fund. The last-mentioned 
reason is the least apparent and needs a brief explanation. In the 
plans under which the method of distribution explains the low profit- 
sharing dividends it is usually provided that net profits set aside__ for 
distribution are JoJ)e_ apportioned between employer and employees 
"in proportlorTto their respective interests." The employer, who is 
invariably the formulator of the scheme, usually assumes that his 
interest in the divisible fund is represented by the amount of his 
capital, while that of the employees can best be measured by the 
labor pay roll. Aside from the fact that this assumption is unsound, 
— the earning power of capital rather than its amount being more 
analogous, if at all comparable, to the labor pay roll,— this method 
of determination of relative interests results in a distribution of the 
fund in a ratio of at least three to one in favor of capital, for the 
reason that the annual cost of labor seldom exceeds one fourth of 
the amount of capital invested. That the method of determining the 
relative interests of the participants is largely responsible for the low 


dividends paid may more clearly be seen from the fact that the only 
profit-sharLg establishment in the United States - moderately suc- 
cessful-that has been paying considerable profit-sharing dividends 
(an average of 85 per cent for the period of 1907-1916) based its 
relative-interest theory upon the earning power of capital instead o 
its amount. As a result of this, distributions were made at the ratio 
about three to one in favor of labor. A computation based upon actual 
figures shows that had the usually prevailing notion of relative inter- 
'rts been applied in this establishment the distribution ratio would 
have been quite different, namely, five to one, and in favor of capital. 
From a study based upon the facts and figures found n the recent 
report of the Federal Bureau of Labor Statistics, supplemented by 
personal observations, the following conclusions may be drawn: 

I. Almost seven tenths of the profit-sharing plans examined by he 
mentioned report of the Bureau of Labor Statistics yielded to the 
beneficiaries an annual augmentation of their earnings of less than 
xo per cent. Therefore, if labor difficulties are to be solved through 
considerable augmentations of the incomes of the employees pro^^^^^^ 
sharing, as it stands at the present time, will not do i . No one at all 
familiar with the nature of the present-day wage conflicts can possibly 
venture the opinion that even an all-around wage increase of 10 pe^^ 
cent will contribute materially toward the establishment of industrial 
peace and the creation of a general harmony of interests^ 

2 If again, industrial peace is to be brought about by a better 1 
und'erstanding between employer and employees and the development 
Tmutual confidence based upon some degree of democratization 
of industry, profit-sharing, in its present form at least, can hardly \ 
render any appreciable assistance. The profit-sharing employer s 
"t as kee'n about his traditional prerogatives to hire and fire and to 
run his business regardless of the opinion of his emp^^^^ ^/J^ 
non-profit-sharing confreres. Trade-unionism and -11- ^^^^^^^^ 
ing are no more popular in profit-sharing establishments than else- 
where In fact, no profit-sharing firm is known to have m ope ation 
Inv system o\ coUective bargaining or of definitely established 
friendly relations with trade-unions. In this connection i may be of 
interest to observe that one of the oldest, most widely known, and 
mS successful profit-sharing employers specifically excludes from 
lU.S. Bureau of Labor Statistics, Bulletin No. 208 (1917), PP- 37-44- 



the benefits of his scheme certain groups of his employees who through 
unionization have raised their rates of wages " to an unusually high 
point," on the theory (taught him by experience) that "good 
union men are, as a rule, poor cooperators." On the contrary, instead 
of evoking good will, profit-sharing, on account of its arbitrary char- 
acter under which employers unconditionally reserve to themselves 
the privilege to discontinue or modify the entire arrangement, is a 
rather potent breeder of suspicion and distrust. 

Although substantially agreeing that their plans have greatly im- 
proved their relations with the employees and contributed con- 
siderably to the stabilization of their working force, profit-sharing 
employers disagree greatly as to the results achieved with reference to 
increasing the individual or collective efficiency of the participating 
employees. Only three out of sixty stated definitely that increased 
efficiency has resulted ; and these have paid unusually high profit- 
sharing dividends to their employees in the past. Aside from profit- 
shanng employers, neither employees nor employers have any 
confidence in profit-sharing. As far as the former can give expression 
to^their opmions, they have put themselves on record as opposed to 
it.i This attitude of employees toward such schemes is usually ex- 
plained by the fact that, in the opinion of their leaders, profit- 
shanng plans have an inevitable tendency to hinder the development 
of trade-unionism and collective bargaining. Labor leaders are of the 
opmion that these schemes make increased earnings uncertain, con- 
tmgent wholly upon employers' profits and payable only "at' their 
( own sweet will." An informant belonging to a labor organization 
explamed his opposition to profit-sharing on the ground that "there 
is no sense in playing a game the rules and regulations of which are 
formed without the consent of one of the principal parties concerned 
such rules, furthermore, being subject to change at any time without 
common consent." Workmen, he said, prefer unqualified increases in 
wages to a problematical share in the employers' enterprises in the 
management of which they do not partake. Employees, furthermore 
have no faith in profit-sharing, because under only one of the plans 
m existence are they granted the privilege of inspecting the books of 

EmX'ers'''"'rtiol?r-"'^''r ^'''' "^^" ^^ "Profit-Sharing by American 
PP 233-243^ Federation, Welfare Department, Report (1916), 


the employer in order to convince themselves that the full share due 
them has been distributed. Suspicion is further augmented because 
under a majority of the plans the prospective beneficiaries are not 
even given an inkling as to the specific proportion of the profits that 
their employers are willing to share. What is there then, employees 
repeatedly say, to prevent an unscrupulous employer from juggling 
his profit-and-loss account in order to avoid the payment of the 
promised benefits? 

The attitude of profit-s haring employees toward such schemes is 
interesting and instructive. As a rule this attitude varies with the 
nature of the position held by the informant and with his general 
views on industrial questions. In all, three distinct attitudes were 
observed; to wit , comple te_apprqval, absolute condemnation, and_a 
general indifference which took profit-shlnngTs'Tmatter of course. 
Profit-sKarmg^employees who hold well-paid supervisory or execu- 
tive positions were definitely in favor of the plans. To this small 
group of participants the scheme appeared to be an actual realization 
of a state of community of interest between employer and employee. 
Among the bulk of the ordinary wage-earners two distinct opinions 
prevailed. If the informant happened to be a member of a trade- 
union or was an ardent believer in organized labor and collective 
bargaining, his opinion on profit-sharing was analogous to those of 
the labor representatives cited above ; namely, absolute disapproval 
of the scheme irrespective of the benefits that might accrue to the 
participants. To informants of this group the profit-sharing plan 
was a carefully planned attempt on the part of the employer to 
stimulate production, forestalling at the same time the possibility of 
collective demands for higher wages and better conditions of em- 
ployment. The proportion of participating employees that expressed 
this opinion was not very large and constituted, perhaps, not more 
than one fifth of those interviewed. The attitude of the great ma- 
jority of the participating employees was one of general indifference. 
Profit distributions were taken as a matter of course, were expected, 
and were relied upon in the balancing of their income and expendi- 
ture accounts. The employers' motives were not questioned as long 
as distributions continued at regular intervals. If, however, the 
shares paid grew less or their distribution irregular, suspicion was 
engendered and dissatisfaction with the scheme aroused. 


Nl } 





The profit-sharing field is rather unique in the sense that under 
its arrangements additional duties carry with them no new rights . 
Under most of such schemes the employees are constantly reminded of 
the fact that they are no longer mere employees, that they are part- 
ners in the business and are therefore expected to conduct themselves 
as such — to avoid any moves or acts, such as requests for better 
conditions and higher wages, that will inconvenience the business. 
These new duties, however, involve no established rights to benefits, 
for ea ch of the schemes specifically reserves to the employer the 
right (i) to determine which of the employed shall participate and 
under what conditions they may do so, (2) to hire and fire at pleasure, 
and (3) to discontinue or modify the entire arrangement without no- 
tice or consent of the employees.^ Legally shares in profits thus be- 
come mere gratuities, which the employer may or may not dispense.^ 

That profit-sharing is not popular with employers may easily be 
inferred from the little headway that such wage schemes have made 
in the United States as well as from the very small number of em- 
ployees working under profit-sharing conditions. Jlmployers have 
but little faith in profit-sharing, because they cannot see how dfs- 
tributions made upon any other basis than that of individual efficiency 
can possibly contribute to the augmentation of their profits.^ Con- 
sidered as a direct stimulus to efficiency, real profit-sharing cannot 
possibly succeed, because, under it, individual shares are to bear no 
direct relation to anything but the earnings of the business. Again, 
some employers feel that from a strictly equitable viewpoint em- 
ployees admitted to participation in the profits are morally bound 
to be willing to share in the possible losses of the business. Un- 
fortunately, aside from the fact that ordinary workers do not earn 

1 Commenting upon a certain pension scheme under which the annuity allow- 
ances to be granted are expressly described as not a "right" of employees, Bab- 
son^ Confidential Labor Bulletin, L-83, August, 1917, says: "We do not 
believe, though, that a plan of this kind meets the demands of labor in these days 
or is quite in tune with the spirit of the age. If we are not mistaken, there 
is a growing demand among workers for a recognition of rights over and above 
wages. Clients should not expect a plan of this kind to exercise any influence 
on radical employees." 

2 For a detailed discussion of the legal status of profit-sharing, see U.S. 
Bureau of Labor Statistics, Bulletin No. 208, p. 6. 

3 The desire for increased profits, and not philanthropy, was responsible for 
the origin of most of these schemes. U. S. Bureau of Labor Statistics, Bulle- 
tin No. 208 (191 7), p. 170. 


enough to maintain a satisfactory standard of living,^ much less to 
assist employers in meeting business losses, one may appropriately 
doubt the wisdom or even the desirability of asking anyone to share 
in the losses of an enterprise the management of which was to him 
a sort of terra incognita — a sphere absolutely outside of his legiti- 
mate jurisdiction or even inquiry .^ 

The degree of effectiveness of these schemes depends directly 
upon the amount of benefits accruing to the participants. These 
benefits have been rather small, equivalent in many instances to 
less than what ordinarily grateful employers in thousands of estab- 
lishments are in the habit of distributing as Christmas gifts in the 
form of cash bonuses, "gold pieces," and turkeys. Profit-sharing 
does not even succeed in evoking any of the stimuli to efficiency 
that Christmas gifts usually do— perfunctory "thank you" and 
some additional good will to last until after New Year's Day. On 
the contrary, no matter how large or small the amounts distributed 
may be, the one-sidedness of the arrangement and its absolute 
control by the employer make the participants feel suspicious lest 
they do not get all they should. For entirely different reasons this 
feeling of dissatisfaction and lack of confidence in the value of the 
scheme appears also in the mind of the employer. Somehow or other 
he cannot help feeling that from the point of view of greater profits 
more satisfactory results could be obtained with less pretense and 
annoyance, through improvements in working conditions and in- 
creases in wages based upon the payment of bonuses for individual 


W^atl theii-is^ alter all, the raison d'etre of the existing profit- 
sharing schemes, few though they may be? To this question the 
Following answers may be suggested: 

I. The advertising value of the schemes^ the very name of which 
is high-sounding and appeals to the popular mind. The advertising 
value of profit-sharing, it was said, was particularly great in mer- 
cantile establishments which cater to the trade of working people, 
such as grocery and department stores and mercantile institutions 

1 Cf. W. Jett Lauck and Edgar Sydenstricker, Conditions of Labor in Amer- 
ican Industries, New York (1917), PP- 357-363- 

2 The same argument could, of course, be advanced against participation in 
the profits by employees who do not directly assist in the management of the 






selling their goods on the installment plan. Managers of two such 
establishments were certain of the beneficial value of their profit- 
sharing plan in this respect. 

2. The nature of somebusiness organizations, under which it is 
difficult r6~correlate directly individual efficiency witEnts— corre- 
spondiii^ xe_ward. The value of this factor to the employer was clearly 
brought out by the vice president of the Executives' Club of Detroit 
in an article entitled, "Where Profit-sharing Fails and where it 
Succeeds." The author says : " Considered merely as a stimulus to 
increased production and greater net gain, profit-sharing is of par- 
ticular value in plants where ( i ) i ndivid ual efficiency cannot yet be 
exactly~meastired, or where (ay much work is done fax ^way from 
supervision, or where (3) longevity of service is necessary to preserve 
the quality of the product or to "guard trade secrets, or wheFe~(4) a 
supplement to the wage system promoting individual efficiency is 
needed to minimize plant waste." ^ 

3. The effect of the schemes upon the labor turnover. Profit- 
sharing, particularly in the establishments in which the business is 
prospering and in which distributions are made at regular intervals, 
does seem to have a beneficial influence upon the stability of the 
organization. One profit-sharing employer, who made a very care- 
ful study of the effect of his plan, describes this effect as follows: 
"It [profit-sharing] works precisely like an increase in wages, but 
is more valuable because the employee, in order to receive his share, 
has to wait till the end of the distribution period, a fact that makes 
him hesitate before quitting, which would naturally involve the 
forfeiting of his share in the profits." 

4. The momentum of some of the older plans which makes profit- 
sharing a sort of tradition which is difficult to abandon. 

5. The sense of social justice of some employers. To this factor 
is due the existence of three profit-sharing schemes the principal 
object of which was stated to be "an equitable distribution of 
the profits of the undertaking, as a matter of justice, irrespective 
altogether of hopes for increased efficiency." 

6. Xljei^elieliiif some employers that profit-sharing will develop good 
will, diminish industrial strife, and stimulate efficiency, obviating at 
the same time, perhaps, the necessity of granting increases in wages. 

^System Magazine, March, 1916. 


An examination of the causes specified by employers as having been 
responsible for the abandonment of profit-sharing plans that they are 
known to have had in operation reveals the interesting fact that 
many of the plans were discontinued because the new order of things 
failed to appeal to the prospective beneficiaries, who preferred the 
certainty of ordinary increases in wages to the uncertainty of the 
potential profits at the end of the distribution period.^ Demands on 
the part of the new partners for increased wages usually appeared 
unreasonable and unfair to the employer, who quickly decided to 
abandon the scheme. One student of this question has summarized 
the nature of profit-sharing in its bearing upon this conflict of opinion 
as follows : 

It is obvious that if profit-sharing is based upon favor, the so-called 
divisions of profits are nothing more nor less than Christmas presents 
or other periodical gifts and therefore cannot be considered as a 
serious economic factor. 

If profit-sharing is predicated upon the mutual rights and obliga- 
tions arising out of relation of employer and employee, or if it is 
based upon some equitable right or obligation flowing out of that 
relation, it is then permitted to ask at what point in that relation, 
or under what circumstances, does the right to demand an increased 
wage cease and the right to demand a share of profits begin ? 

Unless there is some method of general application by which that 
point may be established, it comes down to this, that the employer, 
and he alone, can say when, to what extent, and under what cir- 
cumstances the employee shall be permitted to exercise his supposed 
right — an arrangement which not only makes the employer the um- 
pire but permits him to change the rules in the middle of the game.- 

One cannot help but feel that the illogical character of profit- 
sharing, as outlined briefly in this article as well as by the authors 
quoted, presents one of the reasons why genuine profit-sharing plays 
such a negligible role in the wage systems of advanced industrial coun- 
tries. The effectiveness of any economic arrangement does not 
necessarily depend, of course, upon its power to appeal to logicians 
or jurists. Prnfit-^hnrin g has failed to h^s j^vne nf nny rnnsequenre 
among the other wage systems ior-the simple leasou that it has failed 
tu ap pear to the instinct^pL econmnic sell-interest of capital and 

HJ. S. Bureau of Labor Statistics, Bulletin No. 208 (1917), P- 166. 
-Francis X. Butler, article in "Profit-Sharing by American Employers," 
National Civic Federation, Welfare Department, Report, pp. 258-259. 






labor and because its tendency to increase efficiency and profit s_. on 
m\t liAiul, u r appreciably t6. augm ent the earnings of the em- 
ployees oft the "other, lias been very limited. ~ 

Earnest advocates of profit-sharing may take exception to these 
conclusions. They may state that the failure of profit-sharing to 
make any appreciable headway among other wage-payment systems 
is due to the fact that it is being operated under unfavorable con- 
ditions. President Eliot may rightly emphasize the point that the 
elements or "adjuncts" which he considers as essential to the success 
of profit-sharing, such as large distributions, welfare work, pensions, 
sale of stock to employees at reduced rates, and ''cooperative manage- 
ment,"^ are seldom found in conjunction with the existing profit- 
sharing plans. This is substantially correct. The report of the Federal 
Bureau of Labor Statistics referred to above shows that almost three 
fourths of the plans distributed shares equivalent to less than 10 per 
cent of the ordinary earnings of the beneficiaries ; that is, amounts 
not sufficiently large in the opinion of President Eliot- to affect the 
efficiency and develop a sense of partnership on the part of the em- 
ployees. Although many of these establishments are known to be 
engaged in some sort of welfare work, few of them are large enough 
and financially stable enough to install and maintain pension funds. 
Many of the profit-sharing firms are small and have no marketable 
stock to sell to their employees. And, as brought out in the preceding 
pages, very few profit-sharing employers manifest any great interest 
in what President Eliot terms cooperative management. The absence 
of some of the factors thought of as essential to the success of profit- 
sharing raises the question as to the reasons for this absence. And, 
as far as one may judge correctly from the opinions of numerous 
employers, the answer to this question is : genuine profit-sharing— 
that is, profit-sharing not related directly to individual efficiency— 
does not pay. 

Boris Emmet 

^Dr. Charles W. Eliot, "The Road to Industrial Peace," The Nation's Busi- 
ness, August, 191 7, p. 16. • ^Ibid. 



THE year 1893 was a bad year. It was the year of the panic. Our 
employees did not earn their dividend, nor did they earn it the 
next year. In the spring of 1894 it was very difficult to keep running. 
Money was difficult to borrow, collections were poor, and orders 
scarce. Common labor in those days commanded $1 a day. Concerns 
about us cut wages, and we decided that the only way to keep 
going was to cut wages. We called the men together and announced 
a cut. They did not like it. We asked the men to come together with 
us and try to devise some method of profit-sharing for the future, but 
they were not interested in sharing profits with a concern that had no 
profits to share. As time went on, profits again appeared and the 
year 1897 was particularly prosperous, and in the spring of 1898 we 
declared an extra 10 per cent dividend. 

At each of the annual meetings the matter of profit-sharing was 
brought up. Nothing was done, however, until the spring of 1899. 
Then the president, Mr. Almeron Eager, came out and said he was 
willing to share profits. He said, " The Bakers have made a success of 
the business, and if they want profit-sharing, I for one am willing 
that they should have it." The other stockholders agreed, and a lib- 
eral form of profit-sharing was devised. They decided to become 
authorized to issue $300,000 of stock: $200,000 to be preferred and 
issued to the old stockholders for their old stock, two shares of the 
new for one share of the old; the other Sioo,ooo to be common 
stock and issued in profit-sharing as profits were earned. 

At this time they had $208,000 of net assets, $8000 in excess of 
the new preferred, and they decided that to get the good will of the 
men they would pay them a 10 per cent cash bonus on their past 

iprom an address before the Second Annual Industrial Service Conference, 
Milwaukee, Wisconsin, April 28, 1919. 










year's wages, and any small amount left over would be paid to the 
stockholders as an extra dividend. The men were called together. 
There was one fellow who refused to come and advised some of his 
fellow men not to come. He told them, "They are only going to 
cut wages again." 

At the meeting the men were paid a 10 per cent cash bonus on their 
past year's wages and told that in the future the Company would 
share its profits liberally with them. They were very much surprised. 
It was explained that an inventory would be taken each year, and 
if after paying the regular 5 per cent dividend on all stock there 
should be a gain, 10 per cent of it was to be put into a sinking fund 
and the rest divided between preferred stock and employees in pro- 
portion to the earnings of each. Employees in this case meant all 
persons in the employ of the Company at the factory for over two 
years, managers as well as laborers and mechanics. 

If the employees should receive during the year $30,000 wages 
and preferred stock $10,000 dividends, then the division was to be 
between the employees and preferred stockholders as thirty to ten. 
Three fourths of the gain after setting aside the sinking fund would 
go to employees and one fourth to preferred stockholders. This 
meant we capitalized labor at twenty times its earnings. 

The first year went by, and we figured up and found we had 60 per 
cent to add to preferred dividends, bringing our total dividends up 
to 8 per cent, and we had 60 per cent to add to employees' wages. 
These amounts were not paid in cash ; only 15 per cent was paid in 
cash and the other 85 per cent in common stock. 

The directors had decided that it would be the policy of the Com- 
pany not to buy the stock. They did not wish to draw cash out of 
the business by buying the stock ; they wished to buy labor-saving 
machinery, enlarge their plant, and put themselves in better shape to 
compete. But there was one fellow who wanted to sell. He had three 
or four shares, and the president said, "It is common to look upon 
common stock as watered stock, and we want to show these fellows 
that it is really worth something and has $100 of real value back of 
it." He moved that in this case we buy in the stock at par. We made 
the offer and it was accepted, and the man was very much pleased. 

We continued year after year. The percentages added to preferred 
dividends and to employees' wages during the first eight years ran 


like this: January, 1900, 60; 1901, 82 ; 1902, 74; 1903, 9^ ; 1904, 
69; 190S, 28; 1906, 81; 1907, 120. 

It was soon apparent that there would be stock continually coming 
on the market. The men organized themselves and tried to buy it as 
fast as it was offered. They wished to keep hold of it, and they wished 
to maintain the price at par. At first they were successful, but it 
soon came faster than they could take care of it and the price de- 
clined. It went down and down until it struck a level of about $65 

a share. 

The stock that was sold went largely into outside hands ; and 
during this interval several of the preferred stockholders (original 
stockholders) died, and their stock went into the hands of their heirs. 
These outside stockholders and heirs began to feel that they wanted 
a larger share in the profits, and they set about to get it. Their plan 
was to get the employees to vote down profit-sharing. They told the 
employees that if they would stop sharing profits, the stock would 
return to par. They also offered as an inducement a 20 per cent 
increase in wages and higher dividends. They failed, and profit- 
sharing continued. 

But by this time we had plenty of capital, and there was a profit 
in the purchase of stock below par, so we decided to change our 
policy in regard to buying stock. Up to this time there had been no 
restrictions on the stock. Employees could sell to whomever they saw 
fit. Since the change in our by-laws in 1909 the stock has been 
issued only on the condition that it be left on deposit with the Com- 
pany under contract to sell to the Company at the market price 
whenever the shareholders wish, and whenever we have sufficient 
funds in our stock-purchase fund. The Company has the privilege of 
buying the stock when the owner goes to work for a competitor, when 
he goes into business for himself, or when he has worked for another 
for five years. If he remains with the Company until he retires, the 
Company cannot buy the stock without the owner's consent. 

The market price of stock is determined by averaging the price of 
the last hundred shares sold. One of the principal elements deter- 
mining the market price of stock is the sale of what we call "stub 
shares." The amount of stock apportioned to honorary employees 
cannot be measured in full shares of $100 each. There are frac- 
tional amounts left over ; these stubs are combined into whole shares 




and sold at the annual meeting. Each owner of a stub is entitled to 
bid for these shares ; the man who bids the highest gets the share or 
shares he bids for at the price bid, and so on until all the shares 
are sold. 

At first the stock was nearly all bought by preferred stockholders 
or by some of the better-paid employees, and it usually went about 
$65 a share, but as time went on, it increased in value until at the last 
annual meeting it sold for a little over $80 a share, and at this time 
it went into many hands. There were only three men who succeeded 
in getting more than one share. 

We used to give 15 per cent in cash and 85 per cent in stock. We 
now give only 10 per cent in cash and 90 per cent in stock. What 
we used to call profit-sharing we now call remaining wage and extra 
preferred dividends. During recent years we have had the following 
results: January, 1908, 100 per cent; 1909, 78; 1910, 100; 1911, 

100 ; 1912, 47 ; 1913, 75 ; 1914, 70 ; 1915, 90 ; 1916, 50 ; 1917, 70 ; 
1918, 100. And this January again another 100 per cent. The 
average of all these figures is 80 per cent ; that is, we have added to 
preferred-stock dividends during the twenty years 80 per cent an- 
nually, and we have added to our employees' basing wage 80 per 
cent annually. . . . 

Some of you may wonder why it is that we could do this, and I 
will admit that when I say the average percentage has been 80 per 
cent, it is somewhat misleading. Not all of our employees receive 
this remaining wage each year, only those who have become honorary 
employees; that is, worked 4500 hours. If we had divided the 
same amounts among all of our employees, it would have resulted in 
about 64 per cent average in place of 80 per cent ; and we do not 
figure these percentages in every case on our employees' actual wages. 
We do with the office employees and dayworkers, but not with piece- 
workers. In their case we base it on the wages they would have 
received had they worked daywork instead of piecework. At piece- 
work they usually earn about 25 per cent more than they do at day- 
work. Had we divided with our pieceworkers on their actual wages, 
it would have cut the percentage from 64 to about 55 per cent. 

Again, if we had gone out in the open market for our capital, we 
would have had to pay 6 to 7 per cent for it, whereas we only pay 
5 per cent on our common stock. 


Then, there has been a profit in the purchase of our stock at less 
than par from the people who have left our employ. We have been 
purchasing it at the market, which has varied all the way from 

65 to 80 per cent of par. 

Taking all these things into consideration, it probably would have 
reduced the average percentage to about 45 or 50 per cent. That is 
to say, had the division been with all our employees and on their 
whole weekly wages, and had we paid 7 per cent for all our capital 
and bought no stock at less than par, our average percentage would 
have been about 45 or 50 per cent. Where has it come from ? 

Some may perhaps think we have not done the fair thing by our 
preferred stockholders, or that we have perhaps paid a small weekly 
wage in order that we might pay a large remaining wage at the end 
of the year. Let us see what we have done for our preferred stock. I 
can remember, on several occasions before we went into this, some of 
the original stockholders wanted to sell, but they couldn't find a buyer. 
There was really no market for their stock, and when we first started 
there was only $100 of property back of each share of preferred ; but 
as time has gone on this amount has increased, and today there is be- 
tween $700 and $800 to earn the dividend on each share of preferred. 
It is to some extent invested in bonds, and the income on these bonds 
alone is sufficient to pay the preferred-stock dividend two or three times 
over. So we have increased the security of preferred stock enormously. 
The Company has a standing offer to buy preferred stock at Si 40 a 
share, and besides this we have paid preferred for the past twenty 
years an average annual dividend of 9 per cent. Roughly, 6 per cent 
of this 9 per cent has been paid in cash, the rest in common stock. 

Then, as to what we have done with labor. I have investigated on 
numerous occasions to find out whether we were paying competitive 
wages. I will mention but two things. The United States Depart- 
ment of Commerce and Labor published a bulletin, No. 57, applying 
to the year 1905. In that bulletin they stated that the average wage 
for windmill manufacturers for the year was $503. The average of 
the Baker employees for the year was $561. The output of the 
windmill manufacturers of the nation was $2486 per employee. The 
output for our employees was $3400. Bulletin No. 75, applying to 
the same year, stated that the agricultural-implement concerns on 
the average paid $539, and the average output per man was $2347. 






Now, where does it come from ? It is my belief that this is largely 
the result of increased production due to increased effort and intelli- 
gence of our men, and that if you destroy this remaining-wage 
scheme this production would not continue. 

I believe the overhead per man is less where the men have an in- 
centive such as we have offered. To illustrate: Suppose a barber 
running one chair has an income of $8 per day, and his expenses are 
$4. He has made for himself $4. And supposing he should decide 
that he is going to put forth every effort and increases his output 
10 per cent. The income would then be S8.80, the expenses would 
remain the same, and he would have $4.80 for himself. Or with a 
10 per cent increase in output, he has made 20 per cent increase in 
earnings. You have heard it said that a rented house needs more 
repairs and depreciates faster than a house in which the owner 
lives. I can remember that my mother used to say that a hired 
girl would often prove practically worthless and be inattentive and 
let her work go, but as a rule the same woman after she married 
and had a house of her own would be a good housekeeper and 
become thrifty. 

We had an experience which I wish to relate. Some eighteen years 
ago we wished a galvanizing plant. We contracted with an expert 
galvanizer to come to our plant and do our galvanizing on a ton 
basis. The contract was drawn up in such a way that we were to 
know his cost, and at the end of four years it was our privilege to 
buy him out. We did, but kept his men, giving them the same wages 
that he had paid them, but we told them that if they would make 
the cost of galvanizing less than it had been, we would share liberally 
with them. And they did ; they made the cost less under those con- 
ditions than they had when one man, the foreman, got all the benefit 
of the increased production. . . . 

These remaining wages separate us from some good men, but this 
would be natural, for every man wants to be his own boss. It fur- 
nishes them with capital with which to go into business, and we have 
had a number of valuable men leave us, whereas if they had not had 
the capital they could not have left us. Quite a number of men have 
sold their stock to make their first payments on farms. Three or four 
years ago I was up in the Lake Superior country, and between trains 
my wife and I stopped off at Chetek to see an old schoolmate of hers, 


who lived in the country. On the way the schoolmate pointed out five 
different farmers who had got their start from the sale of our stock. 
Our turnover for a number of years prior to 1917 averaged 24 per 
cent ; for the year 1917, 5o per cent ; for the year 1918 it was 60 per 
cent We carry our own employees' liability insurance. It has aver- 
aged for seven years past 25 cents per $100 pay roll. Forty per 
cent of our employees own their own homes ; 28 per cent owri auto- 
mobiles ; more than half our capital is owned by our employees 
I think that capital should be in the hands of those persons who will 
make it serve the people best ; that is, who will make it do the greates 
good to the greatest number. Our capital is going into the hands of 
those persons who have served the longest and held the most impor- 
tant positions, and I trust they will handle it more wisely than wou d 
parties who were not so familiar with the business nor so vitally 

interested in it. , t vi, j 

Cooperative societies are often a side issue, the owners livelihood 
is not gained through them ; to a large extent they are everybody s 
business. With us cooperation is our principal business, our bread 
and butter. Whatever we can save or produce more than workmen 

usually produce is ours. 

Our board of directors is composed of our foundry foreman, 
windmill-machine-shop foreman, superintendent, buyer, cost account- 
ant and mvself. On the afternoon of the annual meeting we close 
the'shop and hire the city hall for the meeting ; most of the employees 
attend and are interested in knowing the Company's business affairs 
It seems to me that this is much better than to have the capital 
owned almost wholly in Chicago or New York, financial matters 
largely a secret from the employees and neither capital nor abor 
really knowing the other fellow's side. If you separate capital too 
completely from labor, the conditions become unstable. 

I believe that if, in ordinary times, any corporation will get the 
good will of its employees and tell them that the stockholders in the 
future will be paid the average amount the stock has earned (say for 
the past five years), and any amount which the Company earns in 
addition to this will be divided among the employees, the amount 
which will be coming to the employees will be surprising. 

John S. Baker 

President, Evansvule, Wisconsin 










AT THE close of the year 19 lo the former management of the 
l\ Philadelphia Rapid Transit Company found itself bankrupt in 
cash. It had also lost the confidence of its employees and of the 

The $30,000,000 paid in by the stockholders in payment of their 
stock had been spent, together with all other money which the 
management could secure by mortgage and other means. 

In 1909 and 19 10 the earnings had not been sufficient to pay the 
operating costs, rentals, and interest by over $1,500,000. — to say 
nothing of earning a return on the $30,000,000 paid in by the stock- 
holders, who had then gone nearly eight years without receiving any 
return upon their money. 

Nearly three fourths of the cars in service were of the old four- 
wheel type, together with the rebuilt horse cars (known as "cuts"). 
There was little protection and no comfort while riding on these cars, 
either for the men or the public. 

Accidents had increased to an alarming extent, caused by unfit 
equipment and the general unrest of the men, who, after experiencing 
two serious strikes in 1909 and 19 10, were, in a dissatisfied way, 
working under the terms of a wage settlement provided as the result 
of arbitration. 

The maximum wage of conductors and motormen in 191 1 was 
23 cents, and this maximum rate was to be increased one-half cent per 
hour on July i of each year until 19 14, when the high rate for men 
over five years in service was to be 25 cents per hour. 

In this emergency Mr. E. T. Stotesbury was petitioned by 
the stockholders to take charge of the management and save the 

1 Publication by Philadelphia Rapid Transit Company, 1918. 



situation. Mr. Stotesbury undertook this thankless job, without pay, 
and engaged Mr. T, E. Mitten to represent him in the management 

of the property. , . , , 

The public was made satisfied with promises, which have smce 

been faithfully met. 

The stockholders were told that they must still wait for any return 
upon their $30,000,000 until both men and public had been accorded 

fair treatment. . 

The condition of the Company was explained to the men, and it 
was pointed out that it would be impossible for the Company to 
survive if it increased the proportion of its earnings then being paid 
to its conductors and motormen, which approximated 22 cents 
out of every dollar received by the Company in fares from 


A promise was made by Mr. Mitten at this time, 191 1, that if the 
men would cooperate under a plan by him set forth, 22 cents out of 
every dollar received by the Company in fares from passengers would 
be set aside in a fund to be used for payments to conductors and 
motormen. Mr. Mitten stated that, in this event, the maximum 
wage attained by the close of a five-year period, July, 1916, would, 
in his opinion, be not less than 28 cents per hour. 

It was in August, 19 11, that the Cooperative Plan was adopted by 
the Stotesbury management and accepted by vote of the men in 
November of the same year. ^ 

The Cooperative Plan has well stood the test of over seven years 
vicissitudes. Through its agency mutually satisfactory working con- 
ditions have been established and maintained. 

The public have had a continuity of service, as against the strike 
conditions previously prevailing, and over $16,000,000 has been 
spent for new cars and other improvements. During the year ended 
June 30, 1918, 741,140,866 passengers were carried at an average 
fare of 3.96 cents per passenger as against 432,884,253 passengers 
carried at an average fare of 4.15 cents per passenger during the 

year ended June 30, 1910. 

The men actually received 31 cents per hour at the close of the 
five-year period, 1916, as against the 28 cents originally estimated, 
and this was increased as of July 15, 1918, to 43 cents per hour as 
a result of the workings of the Cooperative Plan. 


Prior to the recent raise to 48 cents per hour (to accord with the 
National War Labor Board Scale) the Cooperative Plan had pro- 
duced an increase of 20 cents per hour in maximum pay, amounting 
to $5,368,153.18 more in this period than the men would have re- 
ceived under a continuation of the strike-settlement scale. This is 
the greatest increase of wages obtained in any American city during 
this period. 

Greater advantages in sick and death benefits were assured. 

Improved working conditions and modern devices for controlling 
the mechanism of the cars were installed, to which the men responded 
by cutting the number of accidents in half. 

The principle of the Cooperative Plan, as originally established, 
that is, that employees may belong to any union or other organization 
without " let or hindrance," has proved to be the rock of its depend- 
ence and the disarming of its opponents. Of the two attempted 
strikes, neither proved effective in causing serious interruption to 
service. The attempt in the present year was so timed as to take 
full advantage of the depleted force occasioned by the draft require- 
ments of the government. It afforded the most striking demonstra- 
tion of the effectiveness of cooperative effort between the Company 
and employees, in that the cars necessary to provide the extra service 
to war workers were at once manned and operated for several weeks 
by volunteers from all departments of the Company, so effectively 
that when called upon to answer the complaint made to the War 
Labor Board at Washington the management was able to prove by 
the representatives of the shipyards, arsenals, etc. that service had 
not been interrupted and was being adequately supplied. As a con- 
sequence the War Labor Board dismissed the complaint, following 
our voluntarily undertaking to adopt the wage scale then being 
established by the War Labor Board to govern the cities of Chicago, 
Cleveland, Detroit, and Buffalo, and our further undertaking to 
give the objecting employees opportunity of continuous employment 
during good behavior. 

The investigation of the War Labor Board, and the cross-exami- 
nation of those of us who appeared as representing the Cooperative 
Plan, brought out certain points in the plan there shown as capable 
of being misrepresented and misunderstood. This, together with the 


abolition of the 2 2 per cent fund, the establishment of the War Labor 
Board basis for the new wage scale, and the apparent desirability of 
a broadening and enlargement of certain features of the plan, made 
necessary the preparation of an amended plan, which has been sub- 
mitted to the employees, by means of United States mail, in such a 
way as to present the opportunity for examination and decision under 
influence of the home and counsel of the family. 

The stockholders received a total of $2,847,933.50 in dividends, 
and a 5 per cent dividend rate has been established. They have 
also a greatly improved condition of their property, including the 
equity of the undistributed surplus income accumulated under this 


The Cooperative Plan has thus demonstrated what can be accom- 
plished where both men and management strive together for one 
common purpose. 


The Stotesbury-Mitten management, as a result of the" past seven 
years' experience, now presents the following statement of policy and 
practice, which it is proposed shall hereafter cover the joint undertak- 
ings of the men and the management in the way of cooperative effort. 

The principle of the Cooperative Plan of 191 1, that is, that em-r 
ployees may belong to any union or other organization without 'Met 
or hindrance," is hereby ratified and confirmed ; it being understood, 
however, that in the interest of service to the public the rules of the 
Company must be obeyed. 

Satisfactory service insures continuous employment with the Com- 
pany. In the event of there being such a decrease in the business 
of the Company as makes it necessary to reduce the force, those 
giving the least satisfactory service shall be the first to be dropped 
from the pay roll of the Company. 

There shall be no discrimination against employees who, for 
any reason, do not become members of the Cooperative Welfare 

Cooperative effort is recognized as the keystone of all accomplish- 
ment in rendering proper service to the public, and good service will 
be recognized by such advancement as opportunity offers. 





The War Labor Board, in its wisdom, determined upon an advanced 
wage for employees of street railways. This management, in agree- 
ment with the Cooperative Committee, advanced the wages of its 
trainmen another 5 cents, to a maximum of 48 cents per hour, and 
has adjusted the wages of its other employees accordingly. This at 
once brings all employees upon a proper comparative basis and, by 
averaging the wage scales of the other cities of the first class under 
the jurisdiction of the War Labor Board, namely, Chicago, Cleve- 
land, Detroit, and Buffalo, gives us a permanent basis upon which 
to adjust the wages of the employees in each of the departments 
from time to time as occasion may warrant. 

This new basis makes unnecessary the longer continuance of the 
22 per cent fund and opens the way to a broadening of the Cooper- 
ative Plan to include all employees of the Company upon equally 
favorable terms. 

The original Cooperative Plan, covering the payment of sick bene- 
fits, now provides insufficiently in amount and imperfectly in time 
and method of payment. The first plan of death benefits and of 
pensions became inadequate and subject to much improvement. 

Therefore, we must now devote our energies to enlarging the scope 
of the Cooperative Welfare to include all employees one year in 
service, and to increase and improve sick benefits, death benefits, 
and pensions. 

The government has been good to us in various ways. The War 
Labor Board has dismissed the complaint, of those who were desirous 
of destroying our efficiency. The Emergency Fleet Corporation and 
the Bureau of Industrial Housing and Transportation have ad- 
vanced us millions of dollars with which to buy new cars and other 

The stockholders have permitted us to increase wages of train- 
men more than $5,000,000 over the amount which the men would 
have received under the 1910 strike-settlement scale. The stock- 
holders themselves have received less than $3,600,000 during the 
seven years, as a return upon their $30,000,000 of invested capital, 
and have now again let us advance wages to meet the needs of the 
men, and this without knowing where tJie money is coming from. 



The bounden duty of the men and the management under these 
circumstances is to do their level best to cut out all wasted effort. 
Man power and fuel can be thereby saved. By helping the govern- 
ment to conserve these most essential things we will not only be doing 
our patriotic duty but in addition will be doing all in our power to 
hold down our rates of fare to the lowest possible point consistent 
with the following : 

1. Efficient service to the public. 

2. Payment of adequate wages. 

3. Proper protection of invested capital. 

Compensation for Injuries 

The Company will continue to pay the compensation as determined 
under the Workmen's Compensation Act for injury to employees 
resulting in: 

1. Total temporary disability. 

2. Partial (permanent or temporary) disability. 

3. Limited number of serious dismemberments. 

4. Total permanent injuries. 

5. Fatal injuries. 

The period and amount of compensation are determined under 
this act in accordance with the disability sustained. 

Amended Pi^n 

The Cooperative Plan of 19 11, redrawn to meet the changed con- 
ditions, follows and will be known as the Cooperative Plan of 19 18. 

Voice and Vote 

1. The workers shall have a free and independent vote for repre- 
sentatives for proper collective bargaining, and 

2. Proper committee organization of such representatives, so that 
class and group contact may be assured and the integrity of workers' 
committees be established and maintained as such. 


The business of Employer is divided into classes, or departments, 
and each department is subdivided into contact groups, or Branches. 


a ' 


Differences between Employee and Employer shall be settled 
through the medium of 

1. Branch Committees. 

2. Department Committees. 

3. General Committees. 

4. Board of Arbitration. 

Any local point of difference shall be taken up by the Branch 
Committee at the local Branch of origin. 

When a grievance is not settled through the proper Branch Com- 
mittees, then it shall be taken up by the respective Department 

When a grievance is not settled through the proper Department 
Committees, then it shall be taken up by the General Committees. 

When a grievance cannot be settled through the General Com- 
mittees, it shall then be settled by arbitration. 

All appeals shall be submitted in written form to the secretary of 
the respective committees, briefly setting forth all the facts of the 
matter at issue. 

In the discussions of the Department Committees and of the 
General Committees it is intended that Employees shall sit on one 
side of the table, so to speak, and Employer on the other side, 
throughout the collective bargaining contemplated by this plan. 

The majority of any Committee of Employees shall be the voice 
of that committee. 

The majority of any Committee of Employer shall be the voice of 
that committee. 

Whenever the minds of the majorities of any committees meet, 
the controversy shall be settled. 

While it is intended that there shall be full and free discussion in 
order to arrive at an amicable understanding and settlement of con- 
troversies, whenever it is necessary to take a vote to ascertain the 
voice of any committee, the committees for the employees and for 
the employer shall have the right to retire and cast their vote in secret 
caucus. In such secret caucus all such votes shall be taken by secret 
ballot, said ballots to be returned unopened to the secretary for the 
committees. The secretary shall count the ballots under the ob- 
servation of both committees and announce the result in open 

Branch Committees 


There shall be elected two representatives by the workers at each 
depot, station, or division. The candidate receiving the highest vote 
shall be declared No. i Branch Committeeman for that depot, sta- 
tion, or division for the ensuing year, and the candidate receiving the 
second highest vote, in like manner, shall be declared No. 2 Branch 

The employer shall appoint two representatives for each depot, 
station, or division. 

The two Committeemen elected by the workers shall constitute 
the Branch Committee for Employees. 

The two representatives appointed by the Company shall consti- 
tute the Branch Committee for Employer. 

Committeemen shall be elected to serve for the period of one 
year. It shall be their duty well and truly to represent their fellow 
employees and to give all matters under consideration or discussion 
their best thought and the benefit of their knowledge and experience. 

At least once in every three months there shall be an opportunity 
for a meeting of workers at each Branch, when reports shall be 
made by the local Branch Committeemen. 


The dates upon which Committeemen elections shall be held, as 
well as the hours during which the polls will be open, shall be so 
arranged as to insure to every qualified voter at the local depot, 
station, or division opportunity to cast a vote for one candidate, it 
being stipulated that the different election dates shall be arranged 
in such order and sequence as to provide always for a working 
majority on the several committees of members who are familiar with 
the nature and routine of the business transacted. 

Notice of any Branch election shall be posted conspicuously at 
the said local Branch twenty-one days in advance of the date set for 
the election. 

All elections for Committeemen shall be by secret Australian ballot 
under the supervision and direction of an Election Committee of 
three members chosen by and from the respective Department Com- 
mittee for Employees. 

It i 

„ 1 1 

" '1 i 

'I I 


\ ) 






All ballots cast, together with the official return of the Election 
Committee, shall be forwarded promptly to the Secretary of the De- 
partment Committee, to become a part of the permanent records. 

In case of decease, leaving service, or inability to act of any 
Branch Committeeman, the remaining Committeeman shall act until 
a successor is elected. An election shall be held to fill the vacancy as 
promptly as possible in the same manner as the original choosing 
provided by this plan. 

Qualifications for Voters 

To qualify as a voter the employee must have been six months in 
the Company's service, be regularly assigned to duty, and not occupy 
an official position of any character with the Company. Every voter 
shall be entitled to all the rights and privileges under this plan. 

No voter shall be permitted to cast a ballot unless he or she shall 
appear at the polls in person and within the hours prescribed for the 

Lists containing the names of the workers qualified to vote at the 
election shall be posted conspicuously at the local Branch three days 
prior to the date set for the election. 

Qualifications for Committeemen 

Candidates, to be eligible to election as Committeemen, must be 
regularly assigned to duty and have been continuously in the employ 
of the Company for not less than two years. 

In the Transportation Department candidates must also be as- 
signed to a regular run and be actually serving in the capacity of 
trainman or its equivalent grade. 

Candidates for election as Committeemen must file with the 
secretary of the General Committees, not less than thirteen days in 
advance of the date of election, official nomination papers, carrying 
the signatures of not less than seven workers qualified to vote at 
the respective Branch location. 

It is not intended that a worker shall sign more than one nomina- 
tion petition at any election. 

It is not intended that any employee who may properly be said 
to represent Employer shall be chosen as a representative of workers. 


Department Committees 



Employees in the several Departments shall be represented on their 
respective Department Committees through their duly elected 


The following Departments will each be represented by its respec- 
tive Department Committee, namely: 

Transportation Department. 

Rolling-Stock and Buildings Department. 

Electrical Department. 

Way Department. 

General Offices Department. 

These Committeemen elected annually by the employees of each 
Department shall be equaled in number by the Company appoint- 
ments of its representatives. Each Committeeman shall be entitled 

to a vote. 

Each Department Committee for Employees shall consist of all 
No. I Branch Conmiitteemen and all No. 2 Branch Committeemen 
elected by the workers at the several depots, stations, or divisions in 
that Department. In the event of decease, leaving service, or in- 
ability to act of either Branch Committeeman, then the remaining 
Branch Committeeman for that Branch shall act on the Department 
Committee until a successor is elected in the manner hereinbefore 
provided for filling a vacancy on a Branch Committee. 


The Department Committee for Employees and the Department 
Committee for Employer shall each elect its respective chairman. 

The secretary for the General Committees, or an authorized repre- 
sentative, shall act as secretary for the several Department Com- 
mittees, without vote. 


Stated meetings of each Department Committee shall be held in 
alternate months throughout the year. Special meetings shall be held 
at the call of the secretary or upon the request of five members sub- 
mitted in writing to the secretary. 




No less than two thirds of the members of any Department Com- 
mittee shall constitute a quorum for the transaction of business at 
any regular or special meeting of that committee. 

General Committees 

The members of each Department Committee for Employees shall 
annually elect two of their number, the members so elected to consti- 
tute the General Committee for Employees. 

The members of the General Committee for Employees shall be 
equaled in number by the Company's representatives, to be appointed 
by the president of the Company, the members so appointed to con- 
stitute the General Committee for Employer. 

A vacancy occurring in the General Committees shall be filled as 
promptly as possible in the manner of the original choosing. 

It shall be the duty of the General Committees to devise ways and 
means for furthering the efforts of the various Department Com- 
mittees for the greatest possible good, to promote harmony and good 
fellowship among all employees of the Company, to formulate plans 
for submission to the several Department Committees, and to render 
every assistance within their power toward advancement of the in- 
terests of the employees and the betterment of the service. 

Further, the General Committees shall possess the power to review, 
modify, or reverse any findings or decision of the Department Com- 
mittees, and may, in their judgment, change any portion of this plan 
or any modification thereof or the composition of any of the com- 
mittees, or any of their various respective functions. 

The scope and authority of the General Committees shall be su- 
perior to that of the Department Committees, and their decisions in 
all matters shall be final and binding, except as hereinafter provided. 


The General Committee for Employees and the General Committee 
for Employer shall each elect its respective chairman. The secretary 
for the General Committees shall be appointed by the president of 
the Company, and shall not be entitled to vote. It shall be the 
duty of the secretary to keep accurate minutes of meetings of all 



committees. For this purpose an assistant secretary shall be em- 
ployed to assist in keeping the minutes and conducting the details 
of the several committees. 


Stated meetings of the General Committees shall be held on the 
third Tuesday of each month. 

Special meetings shall be held at the request of the chairman of 
either of the General Committees, submitted in writing to the 


No less than two thirds of the members of each General Committee 
shall constitute a quorum for the transaction of business at any 
regular or special meeting. 

Board of Arbitration 

If resort to arbitration becomes necessary, then there shall be 
an arbitrator chosen by the General Committee for Employees and 
an arbitrator chosen by the General Committee for Employer, the 
two arbitrators so chosen to select a third arbitrator. Failing unan- 
imous decision, the decision of any two of these arbitrators shall 

be binding. 

In the event that the arbitrator chosen by the General Committee 
for Employees and the arbitrator chosen by the General Committee 
for Employer are unable to agree upon a third arbitrator, then the 
provost of the University of Pennsylvania, the chairman of the 
Public-Service Commission, and the president of the Chamber of 
Commerce shall be requested to serve as additional arbitrators, or, 
failing so to do, to appoint their own personal representatives to act 
as such additional arbitrators. Failing unanimous decision, the 
decision of any three of these five arbitrators shall be binding. 


The pay of members of the General Committee for Employees and 
of all Department Committees for Employees while employed on 
committee work shall be paid from the funds of the Cooperative 
Welfare Association and shall be at the rate received by the respec- 
tive employees at their regular occupations, and while so employed 
they shall receive no pay from the Company. 





The members of the General Committee for Employer and of all 
Department Committees for Employer shall receive no compensation 
from the Association for their services as Committeemen, but shall 
receive from the Company the continuation of their regular pay as 
Company employees. 

Each arbitrator shall be paid from the funds of the Cooperative 
Welfare Association, as compensation for his services, an amount to 
be determined by the General Committees. 

All expenses of any character incident to the carrying out of the 
Cooperative Plan shall be paid out of the funds of the Cooperative 
Welfare Association— the same being represented in the amount of 
the dues as paid in from time to time by the members of the Coopera- 
tive Welfare Association and in the sum of $10,000 per month paid 
in by the Company. 



Membership in the Cooperative Welfare Association is open to em- 
ployees one year or over in service and over sixteen years of age, 
without initiation fee ; $1 per month will be deducted from the pay 
of each member, and said dues will entitle members to life insurance, 
sick benefits and pensions, as herein provided. 

The Company during the period of this management has paid into 
the various funds representing sick benefits, pensions, death benefits, 
and other benefactions, at the rate of approximately $90,000 per 
annum. Under the Cooperative Plan of 19 18 the Company will 
contribute a lump sum of $10,000 per month to the cost of carrying 
out the conditions contained therein. 

Should the income realized by the payment of $1 per month by 
members and $10,000 per month by the Company be found insuffi- 
cient to meet the expenditures of the Association, the dues of mem- 
bers shall be increased sufficiently to prevent a deficit in the funds of 
the Association, and no increase in the amount paid by the Company 
shall be made until the total amount paid monthly by the members 
equals the $10,000 paid monthly by the Company. Thereafter all 
increases shall be borne equally by both. The Company, however 



will not reduce its minimum payment of $10,000 per month should 
the present dues of $1 per month create a surplus in the funds of 
the Association. 

Life Insurance 

A blanket policy has been issued by the Metropolitan Life Insur- 
ance Company, insuring the lives of employees of the Company desir- 
ing to avail themselves of this protection through the medium of the 
Cooperative Welfare Association. 

Certificates of Insurance providing for $1000 life insurance have 
been delivered into the possession of each member of the Association, 
to remain in full force and effect so long as the member continues in 
the employ of the Company and retains membership in the Cooper- 
ative Welfare Association. 

This replaces the death benefit of $150 formerly paid under the 
Cooperative Plan of 19 11, to which the members contributed 25 cents 
per month, and also replaces the S500 given by the Company to 
dependents of deceased employees who had been over two years in 

its service. 

The Metropolitan Life Insurance Company makes payment of 
benefits and insurance under its policy direct to the beneficiaries of 
the members of the Cooperative Welfare Association. 

Each Certificate of Insurance for $1000 issued by the Metropolitan 
Life Insurance Company, under the provisions of the blanket policy, 
entitles the holder, upon leaving the employ of the Company, to re- 
insure for the same amount with the Insurance Company without 
medical examination, at rates based upon the member's then attained 
age. Any such member subsequently returning to the employ will 
again become eligible for reinsurance under the provisions of this 
blanket policy. 

A special feature of this Certificate of Insurance is a provision 
that in case of total and permanent disability, occurring before the 
member shall have attained sixty years of age, from causes arising 
after the issuance of insurance, the insured will be entitled to receive 
from the Insurance Company the $1000 covered by the policy in 
monthly or yearly installments, as set forth in the Certificate of In- 
surance for $1000 now in the possession of each member of the 





Sick Benefits 

Sick benefits are payable at the rate of $1.50 per day, commencing 
with the eighth day's illness, for a period not to exceed one hundred 
days in any consecutive twelve months. 

This replaces the former sick relief of $1 per day for one hundred 
days in any consecutive twelve months. 


Pensions of S40 per month are payable to incapacitated employees 
who have reached sixty-five years of age and have been continuously 
in the service for twenty-five years ; meritorious cases of long serv- 
ice, but falling short of these requirements, to be given special 

This increases the former pension plan from $20 to $40 per month. 


The affairs of the Cooperative Welfare Association shall be ad- 
ministered by a Cooperative Council consisting of the combined 
membership of the two General Committees for collective bargaining. 
The administration of the Cooperative Welfare Association shall 
be entirely separate and distinct from the function of collective 

The Cooperative Council shall act as Trustees of Insurance for 
the Cooperative Welfare Association and shall also authorize the 
expenditure of all moneys, including payment of sick benefits. 

The Cooperative Council shall also pass upon the issuance of In- 
surance Certificates and the validity and merit of all applicants for 

The president of the Cooperative Welfare Association, who shall 
also act as chairman of the Cooperative Council, shall be elected an- 
nually from the membership of the Association by the majority 
vote of all the members of the several Department Committees for 

The chairman of the Board of Directors and the president of 
the Company shall be the honorary chairmen of the Cooperative 





THE employee! 





















Chart showing Organization 

The secretary-treasurer of the Cooperative Council and the as- 
sistant secretary-treasurer shall be appointed by the president of the 
Company. The Association shall employ such other assistants as 
may be required. 

The Company's Auditing and Treasury Departments are to be 
placed at the disposal of the Cooperative Council for the purpose of 
keeping the accounts and safeguarding the funds of the Cooperative 
Welfare Association. 





On August 19, 1918, a personal letter signed by President Mitten 
and approved by Mr. Stotesbury was mailed to each employee of the 
Company, together with a booklet containing the provisions of the 
amended Cooperative Plan (which included life insurance, sick bene- 
fits, pensions, wages, and representation through the duly elected 
committees), as well as a card whereon employees so desiring were 
invited to express their approval of the same. 

The response of the employees was prompt and general and 
showed such an overwhelming majority in favor of the amended plan 
as to insure its immediate success. A second letter was therefore 
mailed on August 27 to all eligible employees, one year in the service, 
inclosing an official application card for membership in the Associa- 
tion which provided for certain information required by the Insurance 
Company not contained in the original card. 

The letter explained that a contract had been entered into with 
the i\Ietro[)olitan Life Insurance Company insuring for Si 000 the 
lives of all who became members of the Association, and also de- 
scribed the various conditions governing the issuance of the Certifi- 
cates of Insurance. 

A further letter was sent to all eligible employees on September 6, 
setting forth that under the terms of the contract with the Metro- 
politan Life Insurance Company the insurance on employees who 
mailed their application cards before midnight September 15 would 
become effective when the card was mailed ; that insurance on em- 
ployees who mailed their application cards after midnight September 
15 and up to midnight September 30 would become effective when 
the Certificate was issued, and that any eligible employee who failed 
to mail his application card before midnight September 30 would 
not be insurable unless able to perform the duties of his or her 

All of these communications were mailed to the homes of the 
employees, so that they could be carefully considered by the em- 
ployees and the members of their families. 

At December i, 1918, there were 9073 employees eligible for mem- 
bership in the new Cooperative Welfare Association, of which num- 
ber the applications of 8399, or over 92 per cent are on file. The 


deaths, owing to the ravages of the epidemic influenza, have been 
unusually large, and this, together with the withdrawals from service, 
have reduced the total by 267, leaving a net membership, as of 
December i, of 8132. 

The applications for continued membership very generally bear 
the indorsement of the wife, who, in most instances, is named as the 
beneficiary. The following statement of beneficiaries named in the 
Certificates of Insurance as being entitled to receive the $1000 death 
benefit is of interest : 

Total Per Cent 
Number of Total 

Wife and Children 6459 80 % 

Parents ^^i 10 

Other Relatives 5^8 7 

Estate, etc ^^4 3 

Total 8132 100 

Following the overwhelming indorsement of the plan by the em- 
ployees of the Company, as evidenced by their applications for mem- 
bership in the new Cooperative Welfare Association, the General 
Committee, through its chairman and secretary, on October 21, 1918, 
mailed to all employees a letter outlining the progress of the welfare 
work and declaring the Cooperative Plan of 1918 operative and in 
full effect as of that date. 




SOME time ago I was asked to prepare a memorandum on the 
subject of workshop committees, for presentation to the British 
Association, as a part of the report of a special subcommittee study- 
ing industrial unrest. The following pages contain the gist of that 
memorandum and are now issued in this form for the benefit of some 
of those interested in the problem who may not see the original 

I have approached the subject with the conviction that the worker's 
desire for more scope in his working life can best be satisfied by giv- 
ing him some share in the directing of it ; if not of the work itself, 
at least of the conditions under which it is carried out. I have tried, 
therefore, to work out in some detail the part which organizations of 
workers might play in works administration. And believing as I do 
that the existing industrial system, with all its faults and injustices, 
must still form the basis of any future system, I am concerned to 
show that a considerable development of joint action between man- 
agement and workers is possible, even under present conditions. 

Many of the ideas put forward are already incorporated to a 
greater or lesser degree in the institutions of these works, but these 
notes are not intended, primarily, as an account of our experiments, 
still less as a forecast of the future plans of this firm. Our own ex- 
perience and hopes do, however, form the basis of much here written, 
and have inevitably influenced the general line of thought followed. 


Throughout the following notes it is assumed that the need is 

realized for a new orientation of ideas with regard to industrial 

management. It is further assumed that the trend of such ideas must 

be in the direction of a devolution of some of the functions and 

^Survey, Vol. XLI, 1918, Reconstruction Series No. i. 





responsibilities of management onto the workers themselves These 
notes therefore, are concerned mainly with considenng how far this 
devolution can be carried under present conditions and the necessary 
machinery for enabling it to operate. 

Before passing, however, to detailed schemes it is worth consider- 
ing briefly what the aims of this devolution are. 

It must be admitted that the conditions of industrial life fail to 
satisfy the deeper needs of the workers, and that it is this failure, 
even more than low wages, which is responsible for much of their 
general unrest. Now the satisfaction to be derived from work depends 
upon its being a means of selLfixpre^ion^ This again depends on the 
power of control exercised by the individual over the materials and 
processes used and the conditions under which the work is carried 
out or in the case of complicated operations (where the individual 
can hardly be other than a " cog in the machine") on the willingness, 
uriderstanding, and imagination with which he undertakes such a 
role In the past the movement in industry in this respect has been 
all in the wrong direction ; namely, a continual reduction of freedom, 
initiative, and interest, involving an accentuation of the "cog-in-the- 
machine" status. Moreover, it has too often produced a cog 
blind and unwilling, with no perspective or understanding of the 
part it plays in the general mechanism of production or even in any 
one particular series of operations. 

Each successive step in the splitting up and specializing of oper- 
ations has been taken with a view to promoting efficiency of pro- 
duction, and there can be no doubt that efficiency, in a material 
sense has been achieved thereby and the productivity of industry 
greatly increased. This has been done, however, at the cost of 
pleasure and interest in work, and the problem now is how far these 
could be restored, as, for instance, by some devolution of manage- 
ment responsibility onto the workers, and how far such devolution is 
possible under the competitive capitalist system, which is likely to 
dominate industry for many long years to come. 

Under the conditions of capitalist industry any scheme of devolu- 
tion of management can only stand provided it involves no net loss 
of productive efficiency. It is believed, however, that even within 
these limits considerable progress in this direction is possible, doubt- 
less involving some detail loss, but with more than compensating 






gains in general efficiency. In this connection it must be remembered 
that the work of very many men, probably of most, is given more or 
less unwillingly, and even should the introduction of more democratic 
methods of business management entail a certain amount of loss of 
mechanical efficiency, due to the greater cumbersomeness of demo- 
cratic proceedings, if it can succeed in obtaining more willing work 
and cooperation, the net gain in productivity would be enormous. 

Important and urgent as is this problem of rearranging the ma- 
chinery of management to enable responsibility and power to be 
shared with the workers, another and preliminary step is even more 
pressing. This is the establishing of touch and understanding be- 
tween employer and employed, between management and worker. 
Quite apart from the many real grievances under which workers 
in various trades are suffering at the present time, there is a vast 
amount of bad feeling, due to misunderstanding, on the part of each 
side, of the aims and motives of the other. Each party, believing 
the other to be always ready to play foul, finds in every move easy 
evidence to support its bitterest suspicions. The workers are irri- 
tated beyond measure by the inefficiency and blundering in organiza- 
tion and management which they detect on every side, and knowing 
nothing of business management cannot understand or make allow- 
ance for the enormous difficulties under which employers labor at 
the present time. Similarly, employers are too ignorant of trade- 
unions affairs to appreciate the problems which the present "light- 
ning transformation'' of industry present to those responsible for 
shaping trade-union policy ; nor is the employer generally in close 
enough human touch to realize the effect of the long strain of war 
work and of the harassing restrictions of personal liberty. 

More important, therefore, than any reconstruction of manage- 
' ment machinery, more important even than the remedying of specific 
grievances, is the establishing of some degree of ordinary human 
touch and sympathy between management and men. 

This also has an important bearing~on any^disclKsion with regard 
to developing machinery for joint action. It cannot be empha- 
sized too strongly that the hopefulness of any such attempt lies not 
in the perfection of the machinery, nor even in the wideness of the 
powers of self-government granted to the workers, but in the degree 
to which touch and, if possible, friendliness can be established. It 



should be realized, for instance, by employers that time spent on 
discussing and ventilating alleged grievances which turn out to be 
no grievances may be quite as productive of understanding and 
good feeling as the removal of real grievances. 

Passing now to constructive proposals for devolution of manage- 
ment, the subject is here dealt with mainly in two stages. 

Under Section I some of the functions of management which most 
concern the workers are considered with a view to seeing how far 
the autocratic (or bureaucratic) secrecy and exclusiveness which 
usually surround business management, as far as workers are con- 
cerned, is really unavoidable or how far it could be replaced by 
democratic discussion and joint action. The conclusion is that there 
is no reason inherent in the nature of the questions themselves why 
this cannot be done to a very considerable extent. 

Section II deals with the second stage referred to and considers 
the machinery needed to make such joint action as is suggested in 
Section I workable — a very different matter from admitting that 
in itself it is not impossible! The apparent complication of such 
machinery is doubtless a difficulty, but it is not insuperable and is 
in practice less formidable than it seems at first sight. It must be 
realized, however, that the degree of elaboration of the machinery for 
joint working adopted by any particular industry or firm must be 
in relation to the elaboration of the existing management system. 
It would be quite impossible for many of the refinements of dis- 
cussion and joint action suggested to be adopted by a firm whose 
ordinary business organization was crude, undeveloped, and un- 
systematic. This point is more fully dealt with in this section. 

Section III contains a summary of the scheme of committees con- 
tained in Section II, showing the distribution to each committee of 
the various questions discussed in Section I. 


It is proposed in this section to consider the activities which or- 
ganizations of workers within the workshop might undertake without 
any radical reorganization of industry. What functions and powers, 
usually exercised by the management, could be devolved onto the 







workers, and what questions, usually considered private by the man- 
agement, could be made the subject of explanation and consultation ? 
The number of such questions, as set out in this section, may appear 
very formidable, and is possibly too great to be dealt with except by 
a very gradual process. No thought is given at this stage, however, 
to the machinery which would be necessary for achieving so much 
joint working, the subject being considered rather with a view to see- 
ing how far, and in what directions, the inherent nature of the ques- 
tions themselves would make it possible or advisable to break down 
the censorship and secrecy which surround business management. 

In the list which follows, obviously not all questions are of equal 
urgency, those being most important which provide means of consul- 
tation and conciliation in regard to such matters as most frequently 
give rise to disputes ; namely, wage and piece-rate questions and, to 
a lesser degree, workshop practices and customs. Any scheme of 
joint working should begin with these matters, the others being taken 
over as the machinery settles down and it is found practicable to 
do so. How far any particular business can go will depend on the 
circumstances of the trade and on the type of organization in 

Though machinery for conciliation in connection with existing 
troubles, such as those mentioned, must be the first care, some of 
the other matters suggested in this section — for example, safety and 
hj^giene, shop amenities, etc. — should be dealt with at the earliest 
possible moment. Such subjects, being less controversial, offer an 
easier means of approach for establishing touch and understanding 
between managers and men. 

The suggestions in this section are divided into two main groups, 
but this division is rather a matter of convenience than an indication 
of any vital difference in nature. The suggestions are arranged in 
order of urgency, those coming first where the case for establishing 
a workers' shop organization is so clear as to amount to a right, and 
passing gradually to those where the case is more and more question- 
able. The first group, therefore, contains all those items where the 
case is clearest and in connection with which the immediate benefits 
would fall to the workers. The second group contains the more ques- 
tionable items, which lie beyond the region where the shoe actually 
pinches the worker. These questions are largely educational, and the 



immediate benefit of action, considered as a business proposition, 
would accrue to the management through the greater understanding 
of management and business difiiculties on the part of the workers. 

Questions in Connection with which Shop Organizations 


This group deals with those matters where the case for establishing 
shop organizations, to meet the need of the workers, is clearest. 

I. Collective bargaining. There is a need for machinery for 
carryingTHis funcHD n of the trade-union into greater and more inti- 
mate workshop detail than is possible by any outside body. A 
workshop organization might supplement the ordinary trade-union 
activities I n the foUuwmg directions : '^ ^ ^^ 

a. Wages 

(Note. General standard rates would be fixed by negotiation 
with the trade-union for an entire district, not by committees 
of workers in individual works.) 

To insure the application of standard rates to individuals, to 
see that they get the benefit of the trade-union agreements. 

When a scale of wages, instead of a single rate, applies to a 
class of work (the exact figure varying according to the ex- 
perience, length of service, etc., of the worker), to see that 
such scales are applied fairly. 

To see that promises of advances (such as those made, for in- 
stance, at the time of engagement) are fulfilled. 

To see that apprentices, on completing their time, are raised to 
the standard rate by the customary or agreed steps. 

b. Piecework Rates 
IS assumed that the general method of rate-fixing — for 

example, the adoption of time study or other method — would 
be settled with the local trade-unions.) 

To discuss with the management the detailed methods of rate- 
fixing, as applied either to individual jobs or to particular 
classes of work. 

Wliere there is an agreed relation between time rates and piece 
rates as, for instance, in engineering to see that individual 
piece rates are so set as to yield the standard rate of earning. 

To discuss with the management reduction of piece rates where 
these can be shown to yield higher earnings than the standard. 







To investigate on behalf of the workers complaints as to in- 
ability to earn the standard rate. For this purpose all the 
data and calculations, both with regard to the original setting 
of the rate and with regard to time-booking on a particular 
job, would have to be open for examination. 

(Note. It is doubtful whether a shop committee, on account of 
its cumbersomeness, could ever handle detail, individual rates, 
except where the jobs dealt with are so large or so standard- 
ized as to make the number of rates to be set per week 
quite small. A better plan would be for a representative 
of the workers, preferably paid by them, to be attached 
to the rate-fixing department of a works, to check all cal- 
culations and to look after the workers' interests generally. 
He would report to a shop committee, whose discussions 
with the management would then be limited to questions 
of principle.) 

c. Watching the Application of Special Legislation, Awards, or 

Agreements ; for example, 

Munitions-of-war act, dilution, leaving-certificates, etc. 

Recruiting, exemptions. 

After-war arrangements, demobilization of war industries, res- 
toration of trade-union conditions, etc. 

d. Total Hours of Work 

To discuss any proposed change in the length of the standard 
week. This could only be done by the workers' committee 
of an individual firm, provided the change were within the 
standards fixed by agreement with the local union or those 
customary in the trade. 

e. New Processes or Change of Process 

Where the management desire to introduce some process which 
will throw men out of employment, the whole position should 
be placed before a shop committee to let the necessity be 
understood and to allow it to discuss how the change may be 
brought about with the least hardship to individuals. 
/. Grades of Worker for Types of Machines 

Due to the introduction of new types of machines, and to the 
splitting up of processes, with the simplification of manipula- 
tion sometimes entailed thereby, the question of the grade of 
worker to be employed on a given type of machine continually 
arises. Many such questions are so general as to be the 
subject of trade-union negotiation, but many more are quite 
local to particular firms. For either kind there should be a 
works committee within the works to deal with their applica- 
tion there. 



2. Grievances. The quick ventilating of grievances and injustices 
to individuals or to classes of men is of the greatest importance in 
securing good feeling. The provision of means for voicing such 
complaints acts also as a check to petty tyranny and is a valuable 
help to the higher management in giving an insight into what is 

going on. 

A shop committee provides a suitable channel in such cases as 

the following : 

Alleged petty tyranny by foremen. 

Hard cases arising out of too rigid application of rules, etc. 

Alleged mistakes in wages or piecework payments. 

Wrongful dismissal ; for example, for alleged disobedience, etc., etc. 

In all cases of grievances or complaints it is most important that 
the body bringing them should be of sufficient weight and standing 
to speak its mind freely. 

3. General sho±s2uditiai2^_md-UmitBli^^ ^^^ ^^^^e questions 
which~aTfecrtKe community life of the factory the fullest consultation 
is necessary and considerable self-government is possible. 

The following indicate the kind of question : 

a. Shop Rules 

Restriction of smoking. 
Tidiness, cleaning of machines, etc. 
Use of lavatories and cloakrooms. 
Provision, care, and t\pe of overalls. 
Time-booking arrangements. 
Wage-paying arrangements, etc., etc. 

b. Maintenance of Discipline 

It should be possible to promote such a spirit in a works that 
not only could the workers have a say in the drawing up of 
shop rules, but the enforcing of them could also be largely 
in their hands. This would be particularly desirable with 
regard to 

Enforcing good timekeeping. 

Maintaining tidiness. 

Use of lavatories and cloakrooms. 

Promoting a high standard of general behavior, etc., etc. 

c. Working Conditions 

Meal hours, starting and stopping times. 
Arrangements for holidays, etc. 
Arrangement of shifts, night work, etc. 




d. Accidents and Sickness 

Safety appliances and practices. 
Machine guards, etc. 
Administration of first aid. 
Rest-room arrangements. 
Medical examination and advice. 

e. Dining Service 

Consultation re requirements. 
Criticisms of and suggestions re service. 
Control of discipline and behavior. 
Seating arrangements, etc. 
/. Shop Comfort and H)^giene 

Suggestions re temperature, ventilation, washing accommoda- 
tion, drying clothes, etc. 
Provision of seats at work, where possible. 
Drinking-water supply. 
g. Benevolent Work 

Shop collections for charities or hard cases among fellow 

Sick club, convalescent home, etc. 
Saving societies. 

4. General social amenities. A works tends to become a center 
of social activities having no direct connection with its work, for 
example : 

Works picnics. 

Games ; for example, cricket, football, etc. 

Musical societies. 

Etc., etc. 

These should all be organized by committees of the workers and 
not by the management. 

Questions on which Joint Discussion would primarily be of 

Advantage to the Management 

In this group are those questions with regard to which there is no 
demand put forward by the workers, but where discussion and ex- 
planation on the part of the management would be desirable and 
would tend to ease some of the difficulties of management. The 
institution of works committees would facilitate discussion and 
explanation in the following instances: 



1. fr^f^*-^^^^^'^*^ ^f mnn ^^ement to workers. In any case of new 
rules or new developments, or new workshop policy, there is always 
the greatest difficulty in getting the rank and file to understand what 
the management is ^'getting at." However well meaning the change 
may be as regards the workers, the mere fact that it is new and not 
understood is likely to lead to opposition. If the best use is made of 
committees of workers, such changes, new developments, etc. would 
have been discussed and explained to them, and it is not too much to 
expect that the members of such committees would eventually spread a 
more correct and sympathetic version of the management's intentions 
among their fellow workers than these could get in any other way. 

2. Education in shop processes and trade technic . The knowl- 
edge of mosTworkers is limited to the process with which they are 
concerned, and they would have a truer sense of industrial problems 
if they understood better the general technic of the industry in which 
they are concerned, and the relation of their particular process to 
others in the chain of manufacture from raw material to finished 


It is possible that some of this education should be undertaken 
by technical schools, but their work in this respect can only be of 
a general nature, leaving still a field for detailed teaching which 
could only be undertaken in connection with an individual firm or a 
small group of similar firms. Such education might well begin with 
the members of the committee of workers, though if found feasible 
it should not stop there, but should be made general for the whole 
works. Any such scheme should be discussed and worked out in 
conjunction with a committee of workers, in order to obtain the best 

from it. 

3. Promotion. It is open to question whether the filling of any 
given vacan^^^^mild profitably be discussed between the management 
and the workers. 

In connection with such appointments as shop foremen, where the 
position is filled by promoting a workman or "leading hand," it 
would at least be advisable to announce the appointment to the 
workers' committee before making it generally known. It might per- 
haps be possible to explain why a particular choice had been made. 
This would be indicated fairly well by a statement of the qualities 
which the management deemed necessary for such a post, thereby 



tending to head off some of the jealous disappointment always in- 
volved in such promotions, especially where the next in seniority is 
not taken. 

It has of course been urged, generally by extremists, that work- 
men should choose their own foremen by election, but this is not 
considered practical politics at present, though it may become possible 
and desirable when workers have had more practice in the exercise 
of self-management to the limited degree here proposed. 
j One of the difficulties involved in any general discussion of pro- 
Unotions is the fact that there are so many parties concerned and all 
tfrom a different point of view. For example, in the appointment of 
a foreman the workers are concerned as to how far the new man is 
sympathetic and helpful and inspiring to work for. The other fore- 
men are concerned with how far he is their equal in education and 
technical attainments, social standing, length of service ; that is as 
to whether he would make a good colleague. The manager is con- 
cerned, among other qualities, with his energy, loyalty to the firm 
and ability to maintain discipline. Each of these three parties is look- 
ing for three different sets of qualities, and it is not often that a candi- 
date can be found to satisfy all. Whose views, then, should carry 
most weight-the men's, the other foremen's, or the manager's? 
It IS quite certain, however, that it is well worth while making 
some attempt to secure popular understanding and approval of ap- 
pointments made, and a worker's committee offers the best oppor- 
tunity for this. 

It would be possible to discuss a vacancy occurring in any grade 
with all the others in that grade. For example, to discuss with all 
shop foremen the possible candidates to fill a vacancy among the 
foremen. This is probably better than no discussion at all, and the 
foremen might be expected, to some extent, to reflect the feeling 
among their men. Here, again, the establishing of any such scheme 
might well be discussed with the committee of workers. 

4. Educaiionjnj^emral busi ness questioj is. This point is still 
more doubtful than the precedmg. Employers continually complain 
that the workers do not understand the responsibilities and the risks 
which they, as employers, have to carry, and it would seem desirable 
therefore, to take some steps to enable them to do so. In some 
directions this would be quite feasible ; for example, 




1. The reasons should be explained and discussed for the establish- 

ment of new works departments, or the reorganization of 
existing ones, the relation of the new arrangement to the 
general manufacturing policy being demonstrated. 

2. Some kind of simplified works statistics might be laid before a 

committee of workers ; for example, 

Cost of new equipment installed. 
Cost of tools used in given period. 
Cost of raw material consumed. 
Number employed. 
Amount of bad work produced. 

3. Reports of activities of other parts of the business might be laid 

before them. 

(i) From the commercial side, showing the difficulties to be 
met, the general attitude of customers to the firm, etc. 

(2) By the chief technical departments, design office, labora- 
tory, etc., as to the general technical developments or diffi- 
culties that were being dealt with. Much of such work need 
not be kept secret and would tend to show the workers that 
other factors enter into the production of economic wealth 
besides manual labor. 

4. Simple business reports, showing general trade prospects, might 

be presented. These are perhaps most difficult to give, in any 
intelligible form, without publishing matter which every 
management would object to showing. Still, the attempt 
would be well worth making and would show the workers 
how narrow is the margin between financial success and 
failure on which most manufacturing businesses work. Such 
statistics might, perhaps, be expressed not in actual amounts 
but as proportions of the wages bill for the same period. 


Having dealt in the previous section with the kinds of questions 
which, judged simply by their nature, would admit of joint discussion 
or handling, it is now necessary to consider what changes are needed 
in the structure of business management to carry out such proposals. 
The development of the necessary machinery presents very consider- 
able difficulties on account of the slowness of action and lack of 
executive precision which almost necessarily accompany democratic 
organization and which it is the express object of most business 
organizations to avoid. 




1 1 



The question of machinery for joint discussion and action is con- 
sidered in this section in three aspects : 

/ I. The requirements which such machinery must satisfy. 
\ 2. The influence of various industrial conditions on the type of ma- 
i chinery likely to be adopted in particular trades or works. 

\3. Some detailed suggestions of shop committees of varying scope. 

Requirements to be Satisfied 

i ._ Keeping in touch with the trade-unions. It is obvious that no 
works committee can be a subsTitiife'Tor the trade-union, and no 
attempt must be made by the employer to use it in this way. To 
allay any trade-union suspicion that this is the intention, and to 
insure that the shop committee links up with the trade-union organi- 
zation, it would be advisable to see that the trade-union is repre- 
sented in some fairly direct manner. This is specially important for 
any committee dealing with wages, piecework, and such other work- 
ing conditions as are the usual subject of trade-union action. 

In the other direction, it will be necessary for the trade-unionists 
to develop some means of working shop committees into their scheme 
of organization ; otherwise there will be the danger of a works com- 
mittee, able to act more quickly through being on the spot, usurping 
the place of the local district committee of the trade-unions. 

2. Representation of all grades. The desirability of having all 
grades of workers represented on works committees is obvious, but it 
is not always easy to carry out, owing to the complexity of the distri- 
bution of labor in most works. Thus, it is quite common for a single 
department, say in an engineering works, to contain several grades of 
workers, from skilled tradesmen to laborers, and possibly women. 
These grades will belong to different unions, and there may even be 
different, and perhaps competing, unions represented in the same 
grade. Many of the workers also will not be in any union at all. 

3. Touch with management. As a large part of the aim of the 
whole development is to give the workers some sense of management 
problems and point of view, it is most desirable that meetings be- 
tween works committees and management should be frequent and 
regular and not looked on merely as means of investigating grievances 
or deadlocks when they arise. The works committee must not be 
an accidental excrescence on the management structure, but must 



be worked into it so as to become an integral part, with real and 
necessary functions. 

4. Rapidity of action. Delays in negotiations between employers 
and labor are a constant source of irritation to the latter. Every 
effort should be made to reduce them. Where this is impossible, due 
to the complication of the questions involved, the works committee 
should be given enough information to convince it of this, and that 
the delay is not a deliberate attempt to shirk the issue. 

On the other hand, the desire to attain rapidity of action should 
not lead to haphazard and ''scratch" discussions or negotiations. 
These will only result in confusion, owing to the likelihood that some 
of those who ought to take part or be consulted over each question 
will be left out or have insufficient opportunity for weighing up the 
matter. The procedure for working with or through works com- 
mittees must, therefore, be definite and constitutional, so that every- 
one knows how to get a grievance or suggestion put forward for 
consideration and everyone concerned will be sure of receiving due 
notice of the matter. 

The procedure must not be so rigid, however, as to preclude 
emergency negotiations to deal with sudden crises. 

Influence of Various Industrial Conditions on the Type of 
Organization of Shop Committees 

There is no one ty^^e of shop committee that will suit all conditions. 
Some industries can develop more easily in one direction and some 
in another, and in this subsection are pointed out some of the 
conditions which are likely to influence development. 

I. Type of labor. The constitution of works committees, or the 
scheme ot committees, which will suitably represent the workers of 
any particular factory will depend very largely on the extent to 
which different trades and different grades of workers are involved. 

In the simplest kind of works, where only one trade or craft is 
carried out, the workers, even though of different degrees of skill, 
would probably all be eligible for the same trade-union. In such a 
case a purely trade-union organization, but based of course on works 
departments, would meet most of the requirements and would prob- 
ably, in fact, be already in existence. 



In many works, however, at least in the engineering industry, a 
number of different " trades " are carried on ; for instance, turning, 
automatic-machine operating, blacksmithing, patternmaking, foundry 
work, etc. Many of these trades are represented by the same trade- 
union, though the interests of the various sections are often antago- 
nistic ; for example, in the case of turners and automatic-machine 
operators. Some of the other trades mentioned belong to different 
unions altogether. In addition to these " tradesmen " will be found 
semiskilled and unskilled laborers. For the most part these will 
belong to no union, though a few may belong to laboring unions 
which, however, have no special connection with the engineering 
unions. In addition to all these there may be women, whose position 
in relation to men's unions is still uncertain, and some of whose in- 
terests will certainly be opposed to those of some of the men. 

The best way of representing all these different groups will depend 
on their relative proportion and distribution in any given works. 
Where women are employed in any considerable numbers it will prob- 
ably be advisable for them to be represented independently of the 
men. For the rest it will probably be necessary to have at least two 
kinds of works committees: one representing trade-unionists as 
such, chosen for convenience by departments ; the other representing 
simply works departments. The first would deal with wages and 
the type of question usually forming the subject of discussion be- 
tween employers and trade-unions; the other would deal with all 
other workshop conditions. The first, being based on trade-unions, 
would automatically take account of distinctions between different 
trades and different grades, whereas the second would be dealing with 
those questions in which such distinctions do not matter very much. 
^'Ji^MU^Lmdj:£guhjdl^l_ oj employm ent. Where work is of 
an irregular or seasonal nature and workers are constantly beincr 
taken on and turned off, only the very simplest kind of committee 
of workers would be possible. In such industries probably nothing 
but a trade-union organization within the works would be possible 
This would draw its strength from the existence of the trade-union 
outside, which would, of course, be largely independent of trade fluc- 
tuations and would be able to reconstitute the works committee as 
often as necessary, thus keeping it in existence even should most of 
the previous members have been discharged through slackness 




3. mahoratigv ^1 nt oreajiizatim L The extent to which 
management functions can be delegated or management questions 
and policy be discussed with the workers depends very largely on 
the degree of completeness with which the management itself is or- 
ganized. Where this is haphazard and management consists of a 
succession of emergencies, only autocratic control is possible, being 
the only method which is quick-acting and mobile enough. There- 
fore, the better organized and more constitutional (in the sense of 
having known rules and procedures) the management is, the more 
possible is it for policy to be discussed with the workers. 

Some Schemes Suggested 

The following suggestions for shop organizations of workers are 
intended to form one scheme. Their individual value, however, does 
not depend on the adoption of the scheme as a whole, each being 
good as far as it goes. 

I . ...Sh9pzSieward s_committe£ ^ As pointed out in the last sub- 
section, in alactory where the trade-union is strong there will 
probably be a shop-stewards or trade-union committee already in 
existence. This is, of course, a committee of workers only, elected 
generally by the trade-union members in the works to look after 
their interests and to conduct negotiations for them with the man- 
agement. Sometimes the stewards carry out other purely trade- 
union work, such as collecting subscriptions, obtaining new members, 
explaining union rules, etc. Such a committee is the most obvious 
and simplest type of works committee, and where the composition 
of the shop is simple (that is, mainly one trade, with no very great 
differences in grade) a shop-stewards committee could deal with 
many of the questions laid down as suitable for joint handling. 

It is doubtful, however, whether a shop-stewards committee can, 
or should, cover the full range of workers' activities except in the 
very simplest type of works. The mere fact that as a purely trade- 
union organization it will deal primarily with wages and piecework 
questions will tend to introduce an atmosphere of bargaining, which 
would make the discussion of more general questions very difficult. 
Further, such a committee would be likely to consider very little 
else than the interests of the trade-union or of themselves as 


trade-unionists. While this is no doubt quite legitimate as regards 
such questions as wages, the more general questions of workshop 
amenities should be considered from the point of view of the works 
as a community in which the workers have common interests with 
the management in finding and maintaining the best conditions pos- 
sible. Moreover, in many shops, where workers of widely differing 
grades and trades are employed, a shop-stewards committee is not 
likely to represent truly the whole of the workers, but only the 
better-organized sections. 

The shop-stewards committee, in the engineering trade at least, is 
fairly certain to constitute itself without any help from the manage- 
ment. The management should hasten to recognize it and give it 
every facility for carrying on its business, and should endeavor 
to give it a recognized status and to impress it with a sense of 

It would probably be desirable that shop stewards should be 
elert e d by s ec relJialjot rather than by show of hands in open meeting, 
in order that the most responsible men may be chosen and not merely 
the loudest talkers or the most popular. It seems better, also, that 
stewards should be elected for a certain definite term, instead of 
holding office, as is sometimes the case now, until they resign, leave 
the firm, or are actually deposed. The shop-stewards committee 
being primarily a workers' and trade-union affair, both these points 
are outside the legitimate field of action of the management. The 
latter's willingness to recognize and work through the committee 
should, however, confer some right to make suggestions even in such 
matters as these. 

The facilities granted by the management might very well include 
a room on the works premises in which to hold meetings and a place 
to keep papers etc. If works conditions make it difficult for the 
stewards to meet out of work hours, it would be well to allow them 
to hold committee meetings in working hours at recognized times. 
The management should also arrange periodic joint meetings with 
the committee, to enable both sides to bring forward matters of 

/ The composition of the joint meeting between the committee of 

/shop stewards and the management is worth considering shortly. 

In the conception here set forth the shop-stewards committee is a 



complete entity by itself; it is not merely the workers' section of 
some larger composite committee of management and workers. The 
joint meetings are rather in the nature of a standing arrangement 
on the part of the management for receiving deputations from the 
workers. For this purpose the personnel of the management section 
need not be fixed, but could well be varied according to the subjects 
to be discussed. It should always include, however, the highest exec- 
utive authority concerned with the works. For the rest, there might 
be the various departmental managers and, sometimes, some of the 
foremen. As the joint meeting is not an instrument of management 
taking decisions by vote, the number of the management contingent 
does not really matter beyond assuring that all useful points of view 
are represented. 

Too much importance can hardly be laid on the desirability of 
regularjoin^ meetings, as against ad hoc meetings called to discuss 
special grievances. According to the first plan each side becomes 
used to meeting the other in the ordinary way of business, say once 
a month, when no special issue is at stake and no special tension is 
in the air. Each can hardly fail to absorb something of the other's 
point of view. At a special meeting, on the other hand, each side 
is apt to regard as its business not the discussion of a question on 
its merits but simply the making out of a case. And the fact that 
a meeting is called specially means that expectations of results are 
raised among the other workers which make it difficult to allow the 
necessary time or number of meetings for the proper discussion of 
a complicated question. 

Where women are employed in considerable numbers along with 
men the question of their representation by stewards becomes im- 
portant. It is as yet too early to say how this situation can best be 
met. If they are eligible for membership in the same trades-unions 
as the men, the shop-stewards committee might consist of representa- 
tives of both. But considering the situation which will arise after 
the war, when the interests of the men and of the women will often 
be opposed, this solution does not seem very promising at present. 

Another plan would be for a separate women's shop-stewards 
committee to be formed, which would also meet the management 
periodically and be, in fact, a duplicate of the men's organization. 
It would probably also hold periodic joint meetings with the men's 










committee, to unify their policies as far as possible. This plan is 
somewhat cumbersome, but seems to be the only one feasible at 
present, on account of the divergence of interest and the very different 
stage of development in organization of men and women. 

2. SociaLunmi, Some organization for looking after recreation 
is in existence in many works, and if not, there is much to be said 
for the institution of such a body as the social union here described. 

Although the purpose which calls together the members of a works 
community is, of course, not the fostering of social life and amenities, 
there is no doubt that members of such communities do attain a 
fuller life and more satisfaction from their association together when 
common recreation is added to common work. It may, of course, be 
urged against such a development of community life in industry that 
it is better for people to get away from their work and to meet quite 
another set in their leisure times. This is no doubt true enough, but 
the number of people who take advantage of it is probably very 
much less than would be affected by social activities connected with 
the works. The development of such activities will, in consequence, 
almost certainly have more effect in spreading opportunities for fuller 
life than it will have in restricting them. Moreover, if the works is 
a large one, the differences in outlook between the various sections 
are perhaps quite as great as can be met with outside. For this 
reason the cardinal principle for such organizations is to mix up 
the different sections and grades, especially the works and the office 

The sphere of the social union includes all activities other than 
those affecting the work for which the firm is organized. This sphere 
being outside the work of the firm, the organization should be en- 
tirely voluntary and in the hands of the workers, though the manage- 
ment may well provide facilities such as rooms and playing fields. 

Two main schemes of organization are usual. In the first a general 
council is elected by the members, or, if possible, by all the employees, 
irrespective of department or grade. This council is responsible for 
the general policy of the social union, holds the funds, and under- 
takes the starting and supervising of smaller organizations for specific 
purposes. Thus, for each activity a club or society would be formed 
under the auspices of the council. The clubs would manage their own 
affairs and make their own detail arrangements. 



It is most desirable that the social union should be self-supporting 
as far as running expenses go and should not be subsidized by the 
management, as is sometimes done. A small subscription should 
be paid weekly by every member, such subscription admitting them 
to any or all clubs. The funds should be held by the council and 
spent according to the needs of the various clubs, not according to 
the subscriptions traceable to the membership of each. This is very 
much better than making the finances of each club self-supporting, 
since it emphasizes the "community" feeling, is very simple, and 
enables some forms of recreation to be carried on which could not 
possibly be made to pay for themselves. 

The second general type of social-union organization involves 
making the clubs themselves the basis. Each levies its own sub- 
scriptions and pays its own expenses, and the secretaries of the clubs 
form a council for general management. This is a less desirable 
arrangement, because each member of the council is apt to regard 
himself as there only to look after the interests of his club, rather 
than the whole. The starting of new activities is also less easy 
than under the first scheme. 

3. Wf ljarp. f ^ q'tfimittee . The two organizations suggested so far, 
namely, shop-stewards committee and social union, do not cover the 
whole range of functions outlined in Section I. In considering how 
much of that field still remains to be covered it is simplest first to 
mark off, mentally, the sphere of the social union ; namely, social 
activities outside working hours. This leaves clear the real problem ; 
namely, all the questions affecting the work and the conditions of 
work of the firm. These are then conceived as falling into two groups. 
First, there are those questions in which the interests of the workers 
may be opposed to those of the employer. These are concerned with 
such matters as wage and piece rates, penalties for spoiled work, etc. 
With regard to these discussion is bound to be of the nature of bar- 
gaining, and these are the field for the shop-stewards committee, 
negotiating by means of the periodical joint meetings with the 

There remains, however, a second class of questions, in which there 
is no clash of interest between employer and employed. These are 
concerned mainly with regulating the "community life" of the works, 
and include all questions of general shop conditions and amenities 






and the more purely educational matters. For dealing with this 
group a composite committee of management and workers, here called 
the Welfare Committee, is suggested. 
^This would consist of two parts : 

1. Representatives elected by workers. 

2. Nominees of the management. 

The elected side might well represent the offices, both technical 
and clerical, as well as the works, and members would be elected by 
departments, no account being taken of the various grades. Where 
women are employed it would probably be desirable for them to elect 
separate representatives. If they are in departments by themselves, 
this would naturally happen. If the departments are mixed, the men 
and women of such departments would each send representatives. 

The trade-union or unions most concerned with the work of the 
firm should be represented in some fairly direct way. This might be 
done in either of two ways : 

1. If a shop-stewards committee exists, it might be asked to send one 

or more representatives. 

2. Or each of the main trade-unions represented in the works might 

elect one or more representatives to represent their members 
as trade-unionists. 

The management section should contain, in general, the highest 
members of the management who concern themselves with the run- 
ning of the works ; it would be no use to have here men in subor- 
dinate positions, as much of the discussion would deal with matters 
beyond their jurisdiction. Moreover, the opportunity for the higher 
management to get into touch with the workers would be too im- 
portant to miss. It is doubtful whether there is any need for the 
workers' section of the welfare committee to meet separately, though 
there is no objection to this if thought desirable. In any case a 
good many questions can be handed over by the joint meeting to 
subcommittees for working out, and such subcommittees can, where 
desirable, consist entirely of workers. 

It may be urged that the welfare committee is an unnecessary 
complication and either that its work could be carried out by the 
shop-stewards committee or that the work of both could be handled 
by a single composite shop committee of management and workers. 
In practice, however, a committee of the workers sitting separately 



to consider those interests that are, or appear to be, opposed, with 
regular deputations to the management, and a composite committee 
of^'workers and management sitting together to discuss identical in- 
terests would seem the best solution of a difficult problem. 

Everything considered, therefore, there seems, in many works at 
least, to be a good case for the institution of both organizations, 
that of the shop stewards and that of the welfare committee. The 
conditions making the latter desirable and possible would seem to be 

1. A management sufficiently methodical and constitutional to make 

previous discussion of developments feasible. 

2. The conditions of employment fairly stable. 

3. The trades and grades included in the shop so varied and mter- 

mixed as to make representation by a committee of trade- 
union shop stewards incomplete. 


Gathering together the views and suggestions made in the fore- 
going pages, it is felt that three separate organizations within the 
works are necessary to represent the workers in the highly developed 
and elaborate organisms which modern factories tend to become. 

It is not sufficient criticism of such a proposal to say that it is too 
complicated. Modern industry is complicated, and the attempt to 
introduce democratic ideas into its governance will necessarily make 
it more so. As already pointed out, the scheme need not be accepted 
in its entirety. For any trade or firm fortunate enough to operate 
under simpler conditions than those here assumed only such of the 
suggestions need be accepted as suit its case. 

The scope of the three committees is shown by the following 


I. Shop-stewards committee 

Sphere. Controversial questions where interests of employer 

and worker are apparently opposed. 
Constitution. Consists of trade-unionist workers elected by 
works departments. 
Sits by itself, but has regular meetings with the management. 
Examples of questions dealt with: 
Wage and piece rates. 
The carrying out of trade-union agreements. 





Negotiations re application of legislation to the workers repre- 
sented ; for example, dilution, exemption from recruiting. 
The carrying out of national agreements re restoration of 
trade-union conditions, demobilization of war industries, etc. 
Introduction of new processes. 
Ventilation of grievances re any of above. 
Etc., etc. 
2. Welfare committee 

Sphere. "Community" questions, where there is no clash 

between interests of employer and worker. 
Constitution. Composite committee of management and work- 
ers, with some direct representation of trade-unions. 
Sits as one body, with some questions relegated to subcommit- 
tees, consisting either wholly of workers or of workers and 
management according to the nature of the case. 
Examples of questions dealt with : 
Shop rules. 
Such working conditions as starting and stopping times, meal 

hours, night-shift arrangements, etc. 
Accident and sickness arrangements. 
Shop comfort and hygiene. 
Benevolent work, such as collections for charities, hard cases 

of illness, or accident among the workers. 
Education schemes : 
Trade technic. 
New works developments. 
Statistics of works activity. 
Business outlook. 
Promotions — explanation and, if possible, consultation. 
Ventilation of grievances re any of above. 
3. Social union 

Sphere. Social amenities, mainly outside working hours. 
Constitution. Includes any or all grades of management and 

Governing body elected by members irrespective of trade, 
grade, or sex. 
Example of activities: 

Institution of clubs for sports — cricket, football, swimming, 

Recreative societies— orchestral, choral, debating, etc. 
Arranging social events — picnics, dances, etc. 
Provision of games, library, etc., for use in meal hours. 
Administration of clubrooms. 

Haxs Rexold Limited, Manchester, England 

C. G. Renold 





LIKE practically every governmental agency, the system of ship- 
yard labor administration was just getting into its stride when 
the armistice was signed. Early mistakes were being remedied, and 
a thorough and comprehensive machinery had just been set up. But 
relatively short as was the period in which the work was performed, 
the functioning of the organizations upon the various problems can 
be studied and stated with a fair degree of accuracy. 

I. Wages 

The wage question was perhaps the most perplexing problem with 
which the Emergency Fleet Corporation dealt. Increases, it should 
be realized, were granted not only by the Shipbuilding Labor Ad- 
justment Board but by the Corporation itself. In IMay, 1918, the 
Corporation granted certain increases to salaried employees who 
earned less than $2000 a year, since the Board had made no pro- 
vision for these grades. Increases for leading men, quarter men,^ 
and foremen, who had been omitted by the Board, were also granted 
in order that these classes might receive a wage in reasonable balance 
with the wages of the men employed under them. The Fleet Cor- 
poration, however, did not grant further increases in the fall of 1918, 
because of the signing of the armistice and the probability of a 
plentiful labor supply. 

iFrom Joiirnal of Political Economy, Vol. XXVII (iqiq), pp. 362-396. 

2 By leading man is meant the foreman of a group of ten to eighteen work- 
men ; by quarter man, the foreman of a group of twenty-four to thirty 



{ - 


It has always puzzled the man in the street how the Adjustment 
Board and the Fleet Corporation were enabled to order these in- 
creases to be paid and by what power they compelled the shipbuilders 
who were not themselves parties to the memorandum creating the 
Board, to comply with their decisions. The answer is very simple. 
The Fleet Corporation was enabled to make these awards effective 
only by promising to reimburse the shipbuilders for any added 
labor cost occasioned either by the decisions of the Board or by the 
mstructions of the Corporation. 

It must not be thought, however, that this policy of reimbursement 
was adopted immediately and uniformly. It was, indeed, uncertainty 
over this very question in the fall of 1917 that delayed the organi- 
zation of the Board. For months after the first decisions it was the 
practice to grant reimbursement only when the companies made ur- 
gent pleas and not to grant it to companies who entered no claim 
Until June i, 1918, there was no uniform method of granting this 
reimbursement. Each case was settled by itself, and no common 
accounting practice in computing or paying the reimbursement was 
followed- The shipbuilders were compelled to struggle for what they 
got, and many who were in ignorance of the situation did not ask 
for any reimbursement at all. The situation became so unsatisfac- 
tory that on May 31, 1918, the Fleet Corporation issued a lengthy 
General Order outlining a uniform policy to be followed in computing 
any paying for the increased labor cost.^ This was followed by a 
series of General Orders which covered further points 

It was, however, one thing to establish wage rates and another to 
enforce them, and it was their enforcement that occasioned the 
greatest difficulty and unrest. The violations were of two main 

I. Neglect on the part of shipbuilding companies to pay workmen 
backpay due them. This was a provocative cause of dissatisfaction. 
The Adjustment Board made all of its major decisions retroactive to 
varying dates. The computing of this back pay was difficult, and 
the shipbuilding companies were very slow in complying with the 
orders of the Board and the Fleet Corporation. In September 1018 
some of the yards in the Columbia River district had not paid the 
retroactive increases granted in the November, 1917, decisions. The 
iThis was the much-consulted General Order No. 36. 


conditions were also unsatisfactory in several other districts. This 
failure promptly to pay retroactive increases had the inevitable result 
of arousing the ire of the men and making them impatient with the 
whole svstem of wage administration. 

2. Violations of the established rate. This type of violation was 
even more common, and was basically more important, than the 
former. The two memoranda which created the Board were drawn 
up in the period when it was thought that the chief purpose in fixing 
the wage scale was to protect the standard of living of the workers 
against the increase in prices. It was therefore originally intended 
to make the wage scale fixed by the Board merely a minimum. Both 
memoranda term the wage rates which the Board was to fix as ^' basic 
standards." The accepted interpretation of this phrase is that the 
rates established are to be minima below which no member of a craft 
can be paid, but above which individual workers can receive a higher 
wage through superior ability or by the process of individual bar- 
gaining. A strike on the part of the union, however, to obtain a 
higher basic wage for all members of the craft would constitute a 
violation of the agreement and a breach of faith. The Board in every 
one of its first set of decisions explicitly stated that the rates were 


During the first few months some violations were complained of 
where companies were refusing to pay as high wages as the Board 
had ordered or where they were classifying the men in lower grades 
with lower wages than those to which the workmen rightly belonged. 
The Corporation promptly remedied such conditions. 

In the late winter and early spring of 19 18 another significant de- 
velopment occurred, which was caused partly by the drain upon the 
nation's man power, following upon the expansion of the army. 
A decided shortage in labor became apparent, which was especially 
acute in some of the more skilled trades, such as coppersmiths, chip- 
pers and calkers, riveters, machinists, blacksmiths, etc. There was, 
moreover, a very considerable shortage of common labor, which be- 
came more acute after the heavy draft quotas of the late spring and 

. early fall of 19 18. 

Each contractor was desirous of completing his contract and was 
therefore eager to get a sufficient number of men. He was conse- 
quently willing to pay more than the fixed scale in order to get the 



: I 


men. The situation became especially acute in the Pacific North- 
west, where the wage scale in one of the largest shipbuilding plants 
and in many of the outside shops had always been higher than that 
set by the Board, even when the 10 per cent bonus of December, 
191 7, was added. The result was a competitive bidding for labor! 
Workmen moved about from plant to plant, and the stability of 
labor was seriously threatened. The production program was hin- 
dered, for men who were needed on the job were rushing about from 
plant to plant on railroad trains. The Fleet Corporation tried to 
check this by refusing, on June i, 19 18, to reimburse shipbuilders 
for any wages paid in excess of those fixed by the Board. This was 
strengthened by a General Order, issued July i, 1918, making the 
established scale a maximum and prohibiting employers from ex- 
ceeding it. It should be emphasized that it was the Fleet Corporation 
and not the Adjustment Board that issued these orders which estab- 
lished the Board's rates as maxima, although the Adjustment Board 
unofficially approved.' 

These orders- of the Corporation were followed in the majority of 
cases, but in at least two sections of the country they were dis- 
regarded. As has been stated, the situation in the Seattle district 
had always been unsatisfactory, and in order to hold their labor 
many yards raised their wages to a point far in excess of that 
set by the Board, until the situation was one in which practically 
75 per cent of the men were receiving more than the authorized 
wage. The piecework trades along the Atlantic Coast were also 
paid at a higher rate than that authorized, owing to the permis- 
sion of the Board to use the "allowance system" on difficult work 
This was originally intended to apply only to work which was so 
difficult that piece rates would be unfair, and it was not intended 
to cover more than 10 per cent of the operations in the pre-war 

^This was sometimes forgotten even by members of the Board itself ; thus 
Mr. Macy m blammg Seattle shipyard employers states that they "violated 
a^l orders of the Shipbuilding Lal^or Adjustment Board and the Emrr'encv 

f^'.1il7rr'T>,"'"^" "^°^" ''' ^" ^^^- ^' ^^^ -'^ authorized" 

'to nt t' { r-\T ^'"''^' ^'^'"^^y' ^^'9' P- ^>- (It-»^s are mine.) 
lo prevent shipbuilders constructing for private account from disrupting the 
abor market, all yards of this group were compelled to obtain a ,Lrm t from 
he Corporation, bmding themselves not to exceed the authorized scTle Th^ 
legal sanctions behind this requirement were (r) power to requis tfon'hips I 
withholding priorities on materials, etc. :> "uii biups, ^2; 


times Tne shortage of workers, however, was such that most of the 
Atlantic Coast companies abused the use of the "allowance system'' 
and applied it to nearly all of the piecework, whether it was difficult 
or not As a result many of the riveting gangs were granted from 
$25 to $60 a day irrespective of the number of rivets driven, and 
great abuses resulted. This was, indeed, not finally checked until 

February, 1919- . 1 -c .• f 

A further method of violation was the improper classification of 

workers by shipbuilding companies. It was not an unknown practice 

to list workers under classifications with higher rates of pay than 

were actually deserved. Some yards hsted mechanics as leading men, 

quarter men. or foremen, and thus paid them a higher wage without 

osten-iblv violating the orders of the Corporation. In several yards 

there were in some trades more foremen than men, while in one yard 

there were actually thirteen foremen and two men in a particular 

The violation of the wage scales was caused not only by the 
scarcity of labor but by the existence of cost-plus contracts. The 
number of these contracts was not so large as has been commonly 
supposed and, indeed, decreased as time went on, but many of the 
wood-ship yards and a few of the steel yards were on this basis. 
The inevitable result of these contracts was, of course, to make the 
contractor less careful of his labor costs. Although there were only 
a few such yards, their influence was widespread, since they set a 
pace which other companies felt that they must meet in order to 

hold their labor force. 

In addition, the accounting procedure set up by the Fleet Cor- 
poration to cover reimbursement for increased labor cost was cumber- 
some and involved, and the auditing division was not organized as 
effectively as it might have been. Prior to the signing of the armis- 
tice most of the companies which had paid rates in excess of the 
authorized scale were reimbursed for all their labor costs and even 
for their violations. True, the government will not necessarily lose 
on these reimbursements, for final settlements were not made, and 
steps have since been taken to protect the Treasury against improper 
wa-e-cost claims. Nevertheless the temporary adjustments, which 
sometimes covered improper claims, played their part in unsetthng 
labor conditions. 



The "excessive" wages which many complained that the shipyard 
workers were receiving, when they did actually occur, did not result 
from the decisions of the Adjustment Board, which merely adjusted 
wages m keeping with the increase in the cost of living,' but were 
caused either by the competitive bidding of the employers in giv- 
ing higher wages than those awarded in order to attract workmen to 
their particular contract or by the practice of excessive overtime 

In spite of what has been said, it is, however, undoubtedly true 
that in the majority of cases the Adjustment Board's rates were both 
maxima and minima, and that consequently standardization of wages 
was roughly effected. *' 

After the signing of the armistice, as will be stated later, the Fleet 
Corporation suspended making the Board's rates maxima, although 

oi :h°:rrdt3e:° ^'"'"^^ -''^ ^^^^^^'"^^ '- -^^^ '- -- 

II. Hours 

The basic eight-hour day was uniformly established in the shin- 
yards as the standard working-day. Due to a previous custom of a 
Saturday half-holiday in the Delaware River district the basic fortv- 
four-hour week was established there. Overtime was paid for at the 
rate of time and a half for all districts save the Pacific Coast where 
It was paid for as double time. Sunday and holiday work was uni- 
versally paid for at double rates. The Labor Adjustment Board fixed 
no limits as to the amount of overtime that could be worked in the 
Pacific Coast districts, but in their other decisions they prescribed 
a maximum working-day of twelve hours and a maximum sixty- 
hour working-week, e.xcept at the order of the Fleet Corporation or 
Navy Department. ^ 

The overtime bonuses increased rather than decreased the length 
of the average working-day. The men were anxious to receive the 
extra pay for overtime, and the managements were willing, because 
they could charge the expense to the Fleet Corporation. Owing to 
an egregious blunder by one of the construction divisions of the 
Corporation, certain shipyard owners were even paid to July i, 1918, 

cen7ovcr^"he''io^6T.', Tv'' "" ""' '''"'" ^'""' approximately 60 per 


an additional bonus of from 25 per cent to 160 per cent on every 
dollar that the workmen received for overtime.' 

A better system to encourage overtime could not have been devised. 
General Manager Piez was constantly exerting pressure to reduce 
the amount of overtime, but up to June i there were no defi""^ °^f «^ 
issued as to the amount which would be allowed, and the district 
managers of the Corporation were given a great deal of discretion 
On June i the amount of overtime was fixed at a maximum o 
two hours per man per day, "except under extraordinary and special 

circumstances." ,, 

The results of overtime work were, of course, lamentable. Not 
only was it on the whole inefficient but there were cases where men 
loafed during the first eight hours in order that they might have an 
excuse for working overtime. It furthermore directly increased ab- 
senteeism. Some men would work Sunday at double time and then 
lay off a day during the week, thus getting their day's rest and 
receiving seven days' pay for six days' work. It also made many of 
the rank and file reluctant to have more men added to the working 
force since it decreased their opportunities for overtime. 

The labor leaders themselves recognized the viciousness of over- 
time as did the employers after their premium upon it was taken 
away and representatives of both parties from the Pacific Coast 
recommended that it be entirely prohibited except during cases of 
ur-ent necessity. It was not until after the signing of the armistice, 
however, that the Fleet Corporation issued an order specifically put- 
ting the work on an eight-hour day and abolishing overtime. Several 
small groups of workmen then struck because they were prevented 
from working more than eight hours a day. 

The whole experience with the basic eight-hour day and the over- 
time bonus during war time was such as to demonstrate conclusively 
that the basic eight-hour day on contract work for the government 
really conduces to a long working-day. The men are more eager to 
receive the overtime bonus than they are to limit their work to eight 
hours, and "loafing on the job" is the result. Since the government 
iThe reason assigned for granting this bonus was that the efftciency of the 
vard was decreased by workin. overtime and that the management should be 
rewarded for this loss This is an eloquent bit of testimony to the necessity 
of centraliring the control of labor matters in one department under com- 
petent guidance. 




foots the bills the manafiements do not have the objection to over- 
t-me work that they would have if they were compelled to pay 
There can be httle doubt that the Fleet Corporation lost millions of 
dollars by reason of this practice, and it seems clear that a better 
arrangement would have been to establish a flat eight-hour day and 
to have permitted no overtime save in cases of an emergency and at 
the express permission of the Corporation's representatives. 

in. Unions, Shop Committees, and Collective Bargaining 

The creation of the Shipbuilding Labor Adjustment Board was 

m Itself a recognition of the international unions and collective bar- 

gammg. The Fleet Corporation dealt with the union officials as 

representafves of labor, and the policy pursued by the Corpo- 

Cainin"g '' ''^ ^°"' ''^^'^ ^'' ^"^'^ ^' "" ~^« -"-^ve 

"cSe7shln"°' "' T't '"' "'^ ^'''' C°T'°'-^"'°" '°--d the 
closed shop was really that of refusing to disturb the status quo. 

The Board refusea to permit shops to be closed against the will of 

the empbyer if they had not been closed prior to the war. Where the 

districts if "'f-"*' f "" ''^ '^" ^^^"^-° -d P"g«t Sound 

districts, It was continued. 

The Board declared that discrimination should not be practiced 
against any workman either on the ground that he belonged or on 

iv'trF"; Tr '^ '" "°' '^'°"^' '" ^ -'-• Th'= -' -f::c:d 

by the Fleet Corporation, and many men who had been discharged 
or forced from employment were ordered to be reinstated. It was 
of course, impos^ble to enforce this perfectly because of the difficulty 
in determining the real causes for dismissal. 

The principles promulgated by the War Labor Conference Board' 
were adopted by the Fleet Corporation as its labor policy and it 
therefore permitted the organization of the workers into unions and 

r^owt T "'"'""^ ^'^ '"^" ^'"'^ ^■'""^''- '' '^ '^»->' "" -as- 
ie liuTe doub ZtT """=" ''.' ^''P^"' "°^''*^^' but there can 
that itv l\ ?'°"' '"''*' »''^' S^'"^ '" membership, and 

that they emerged from the war far stronger than when they went in 


One of the striking acts of the Board was the authorization of shop 
committees to handle grievances. This was first provided or m th 
Portland district, where the employers refused to recognize the unions 
as such. It wa later authorized for all other yards, save in the 
Seattle and San Francisco districts.' The establishment o these shop 
committees was really intended to provide """"f \^.°"^^^;_;;^.\^^: 
gaining and adjustment of grievances in those yards which would not 
recognize unions. Although many of these committees were organ- 
ized, they cannot be said to have been a success, in actual operation, 

exceot in one district. , i n -^^ i 

In one district, for example, not many of the yards had definitely 
constituted committees, with regular periods of ■"feting nor were 
all crafts within the yards organized. The committees m this district 
did not consider more than 20 per cent of the complaints which arose 
and the other 80 per cent were taken up with the exammer himsel 
either by the business agents of the unions or by the direct appeal 

of the parties interested. 

The chief reasons for the failure of these committees to function 

were as follows: , , „,.^, .... ^ 

I The lack oj active onanizafwn upon the part of the Shipbuilding^ 

Labor Adjustment Board. The Board authorized the organization o, 

the committees, but for a long time did little else. Only one o the 

examiners devoted much attention to organizing these committees. 

Moreover, when the committees were organized they were not always 

siven proper facilities for conducting business. 

2 The indifference of the workers. The men were busy and were 

earning good wages and did not take much interest in organizing 

the committees. 

, The more or less open hostility of the unions. The unions were 
afraid that the committees would usurp their functions and that they 
could be used to break down the unions. This was not wholly un- 
justified, since in some cases the employers attempted to control the 
election of the committeemen. Perhaps the most important point 
about the organization of shop committees is as to whether they will 

1 Alihounh authorized for the Delaware River district in the October 24, 191S, 
deci^on no ^ committees were set up there because of the comphcat.ons 
with the unions that might result. 



be a substitute for, or a supplement to, unionism.^ The unions have 
been loath to approve of them until they were convinced that they were 
intended to be the latter and not the former. 

IV. Labor Supply 

The Fleet Corporation officials at first regarded the securing 
of materials as the most pressing production problem, but after 
this had been centralized in a Supply Division the securing of 
sufficient labor became the most urgent problem. It was the ques- 
tion whether enough men could be brought into the shipyards 
and trained that most agitated shipbuilders during 1918. There 
were really two problems of labor supply: (i) that of securing 
a sufficient number of men for the industry as a whole ; (2) that o'f 
distributing this labor so that all yards could have 'an adequate 
amount. Table I shows the number of men working in the shipyards. 
One must first ascertain how many men were needed to carry out the 
production program before estimating whether the industry as a 
whole had a sufficient labor force. This can now be done with some 
accuracy, but it was very diftkult formerly, for the Shipping Board 
never furnished the Fleet Corporation with a program to be attained. 
The chairman of the Board at Congressional hearings and in public 
speeches set varying figures. The 19 18 program of deliveries for 
steel ships was set by various authorities at 6,000,000 and 4,000,000 
tons. This was later scaled down to 3,100,000 tons by the production 
engineers of the Fleet Corporation. As for wood ships, there was 
never a real production program. Contracts were let more to fill 
the ways than with a view to a comprehensive and well-thought-out 

Since only 2,600,000 tons of steel ships were delivered in 19 18 the 
steel-ship shortage was consequently 500,000 tons.^' Since the aver- 
age production per man-year was approximately 25 dead-weight tons 
(which is a fairly creditable production record) the average shortage 

iSee the statement by Mr. Macy, the chairman of the Board, "Shop Com- 
mittees must not be regarded as a substitute for the unions" (National Civic 
Federation Revieio, February 25, 1919, p. 2). "* t^«a* ^ivic 

A.17^^l ''' 1 ^''°°'°°° ^^«^'S 's ^^'^e" as the goal to be attained. It is a great 
deal below the early estimates of 6,000,000 tons. 





of labor in the steel yards during 19 18 seems to have been around 
20,000. The adequacy of the wood-ship labor force is difficult to 
judge, since there was no program with which to compare it. It is 
unquestionably true, however, that there were as many workmen 
employed as the value of w^ooden ships as ocean carriers justified. 
On the whole, therefore, while there was a shortage of labor in 
the steel yards, this shortage was not as acute as was maintained 
at the time. 

Table I. Growth of the Labor Force on E.F.C. Work in Shipyards 

BY Months 


Average Number ok 

Employees in Woou- 

Ship Yards on 

E.F.C. Work 

Average Number of 
Employees in Steel- 
Ship Yards on 
E.F.C. Work 

Total Employees in 
Shipyards as 
E.F.C. Work 


October .... 

12,000 (est.) 

76,000 (est.) 

88,000 (est.) 

November .... 

17,000 (est.) 

103,000 (est.) 

120,000 (est.) 

December .... 

21,000 (est.) 

125,000 (est.) 

146,000 (est.) 



February .... 


1 66,000 













2 1 1 ,000 




September. . . . 




November .... 




These statistics do not include those employed in plants devoted exclusively 
to fitting out hulls after launching. They do include, however, some clerical 
employees (not more than a few thousand in number) who should be charged 
to construction work for the navy. j • u 

The total number of employees listed in the table should not be confused with 
the number of men actually engaged in shipbuilding. In January, 1918, only 63.7 
per cent of the employees were shipbuilders, while 26.4 per cent were engaged 
on plant construction, and 9.9 per cent were office employees. Indeed, until May 
over 20 per cent of the men were working on plant construction. By October the 
percentage in shipbuilding had increased to 83.8 per cent of the total force, and 
the percentage on plant construction had decreased to 7.7 per cent. 





- 1 



Despite the difficulties of drawing men to a new and exposed in- 
dustry, where transportation and housing facilities were often over- 
crowded and inadequate, the recruiting of the men for the industry 
as a whole was accomplished without elaborate administrative organi- 
zation by the Fleet Corporation itself. The one organization which 
was started, namely the United States Shipyard Volunteers, was con- 
ceived and managed by the Shipping Board and the United States 
Department of Labor rather than by the Fleet Corporation officials. 
The 280,000 men who were enrolled in this organization were listed 
without proper investigation of their qualifications or as to whether 
they were engaged in other essential industries. Once enrolled, they 
were not called upon, for preference in employment was given to 
those who were unemployed over those enrolled in the Shipyard 
Volunteers. The men had expected that they would soon be called 
to service in the yards, and many gave up their jobs. The manage- 
ment of the Shipyard Volunteers, however, did not follow up the 
campaign of enrollment and did not work out with the shipyards any 
concerted plan whereby the labor requirements of the yards might 
be ascertained and men furnished to them. 

After August i, of course, the shipyards were compelled to hire 
all of their unskilled labor through the United States Employment 
Service. Skilled labor could, however, be hired through private 
agencies, and the labor scouts of the shipyards themselves were in 
most cases merely supervised by the Employment Service and allowed 
to act for their individual companies in the securing of both skilled 
and unskilled labor. 

The movement of labor to the yards was therefore voluntary and 
in the main unorganized. The facts which enabled the shipbuildincr 
mdustry to obtam m this way the 300,000 men were principally 
the following : 

I. Higher wages than those paid in the majority of other industries. 
A3 has been stated, the Adjustment Board and the Fleet Corporation 
itself sought to make shipyard wages higher than the average wage 
level in order to draw men to the yards. A substantial differential 
was, on the whole, created. In certain sections of the country, how- 
ever, the wage scale in outside industries for some classes of labor 
caught up with and even surpassed that of the shipyards. On the 
Pacific Coast much difficulty was experienced in retaining common 



labor in the shipyards, since lumber camps and other occupations 
were paying more for common labor than the wage scale fixed by the 
Board. Late in the summer of 1918 the same situation with respect 
to common labor prevailed in the Middle Atlantic States. 

This attempt of the Board to fix higher wages than those in other 
industries was probably justified because of the urgency of the need 
for ships and the necessity of getting men to build them. The men 
thus attracted were, however, drawn not only from nonessential but 
from essential industries as well, and the whole situation illustrated 
the necessity for a general standardization of wages, which un- 
doubtedly would have been effected had the war continued for a 
few months longer. 

2. Patriotic desire of men to assist the government. The need for 
ships was widely advertised, and many thousands of men went to 
the shipyards in order to help " do their bit." 

3. Protection against draft. Under the selective-service law the 
general staff created an "Emergency Fleet" listing, whereby, in 
addition to the ordinary industrial exemption granted to all essential 
industries, additional men could be protected from the draft and the 
labor force constantly stabilized. Some 90,000 workers in the 800 ship- 
yards and industrial plants having contracts with the Fleet Corpora- 
tion were thus exempted from the draft under this form. Thus both 
patriotic reasons and the desire to escape military service operated 
to bring men to the yards and to keep them when they were once there. 

4. Payment by the Fleet Corporation of the transportation ex- 
penses of workers to the job. In order to facilitate the movement of 
men from inland points to the shipyards, the Fleet Corporation 
entered into an agreement with the United States Employment Serv- 
ice early in the winter of 19 18 to pay the transportation of labor 
to the yards. This free transportation was not administered very 
efficiently by the Employment Service, and moreover it operated 
directly to increase the turnover of labor, because men could leave 
one job and go to another at the expense of the Fleet Corporation. 
One man traveled back and forth across the continent three times 
at the expense of the Corporation. Just before the conclusion of the 
armistice a system of control had been set up which promised to 
handle the matter. After the armistice was signed this payment, of 
course, was discontinued. 




While it is probably true that, taken as a whole, the yards of the 
country had nearly a sufficient labor supply, it is just as true that 
this supply was poorly distributed. Many yards had so many men 
that they could not be directed efficiently, and men were compelled 
to remam idle because of lack of work which they could do. The 
early days of the Hog Island and Submarine-Boat projects were but 
lurid examples ; the same situation existed, though in a lesser degree 
in many other yards. ' 

There were, on the other hand, other yards which were greatly 
undermanned, and the causes for the dearth of labor in these yards 
were primarily three: 

I. The individualistic attitude of the shipyard managements 
whereby each contractor ivas concerned only with his own contract 
It was the common practice of shipyards to attempt to recruit labor 
not only from industries other than shipbuilding but from other 
shipbuilders as well. Sometimes this was done directly and em- 
ployees of another company were "scamped" by labor scouts, who 
promised the men higher wages, more overtime, better housing and 
a score of similar inducements. Sometimes it was done indirectly 
by advertisements stating supposedly superior advantages. 

The labor forces of many shipyards were crippled by this "scamp- 
mg" of labor, and shipbuilders often seemed more interested in 
stealing labor from other companies than they were in retaining the 
supply that they had.^ The employers who were most conscientious 
and refused to "scamp" were those who were penalized. The result 
of this individualistic attitude was an enormous loss in productivity 
due to the loss of time in the shifting of labor and the impossibilitv 
of maintaining a stable force. 

2. Competition for labor by other government departments • 
A number of yards lost their men because other near-by government 
industries were paying higher wages than the yards could pay 

3. Unattractiveness of certain shipyards and inefficient manage- 
ment. Wherever poor housing, inadequate transportation, and in- 
sanitary and dangerous conditions existed men were loath to stay. 

1 One enterprising labor scout is reported to have promised a group of shio- 
buUders on the street higher pay than they were then receiving, only to di cove'i 
after he had taken them to work, that they were already em^d at trown 



This was heightened in many cases by the inefficient management 
of the plants, which made men discouraged and disgruntled. Thus 
inefficient management was a cause both of some yards' having too 
much labor and of other yards' having too little. 

It has been said above that the Fleet Corporation did not perfect 
an elaborate organization to deal with the problem of labor supply. 
A short time prior to the signing of the armistice a Labor Supply 
Section was created in the Industrial Relations Division to deal 
with the matter. This section did not have sufficient time to demon- 
strate its usefulness, but it probably would have served to stabilize 
the situation and would have aided in supplying the additional men 
that would have been needed had the war continued. This section 
had perfected a system whereby the labor needs of the shipbuilders 
might be ascertained and was devising methods whereby the labor 
could be supplied to the yards. It was, indeed, getting ready to allo- 
cate labor in much the same way in which the Supply Division had 
allocated materials. 

The most important task which the Labor Supply Section actually 
undertook was its canvass among the demobilization camps. Agents 
were placed in the thirty demobilization camps of the country to 
spread information about shipyard work to the soldiers, although 
work was not guaranteed to anyone. The names of the soldiers in- 
terested were filed, and the shipyards were then furnished with the 
names of men in their vicinity and put in touch with the returning 

V. Employment Management 

Prior to 19 1 8 only thirteen shipyards had employment departments 
in any organized form. Yet as the war progressed the problem of 
increasing ship production, with a steadily decreasing supply of 
workmen in industry, required shipbuilding managers to give special 
attention to securing, placing, and maintaining a competent and 
adequate force of workers. It has been found that in many cases the 
greatest handicap to production is not the scarcity of men but the 
attempt to choose and retain employees without careful thought or 
plan. Accordingly the Industrial Service Department of the Fleet 
Corporation at first conducted pioneer educational activities to 
promote the establishment and improvement of properly functioning 



employment departments. The Employment Management Branch 
of the Industrial Relations Division later cooperated with certain 
universities in training employment managers, provided the shipyards 
with detailed plans for employment departments to meet their 
respective needs, and assisted in placing employment managers and 
assistants as openings for them developed. 

The more tangible results of this work may be indicated. In addi- 
tion to correspondence, conferences, printing manuals, and organizing 
employment managers' associations, surveys of employment methods 
were made in fifty-two yards. Direct assistance was given in im- 
proving their procedure and in planning fourteen employment and 
service buildings. Standard forms on employment procedure, han- 
dling labor loss, physical examinations, labor adjustment, and' other 
approved practices were prepared and made available to all yards 
Forty-one representatives of shipbuilding companies took the 
employment-management courses. Twenty-nine men were also 
trained as reserve employment managers, and from these twenty- 
three were placed as employment and service managers and assistants. 
New centralized employment departments were established in twenty- 
one shipyards. 

These various improvements have probably contributed to the 
stabilization of labor employed in shipbuilding. Complicating factors 
due to the unsettled industrial conditions of war time, especially 
aggravated in the expanding shipbuilding industry, enter into the 
situation and prevent a fair comparison of different periods as to 
the stabilizing effects of proper methods of employment management 
No conclusions, therefore, are deducible from the chart of the per- 
centage of labor turnover, given later in this article, as to the effect 
of improved employment procedure on turnover. Further experience 
alone can provide data upon which to base reliable deductions. 

VI. The Training of Men 

The mere addition of 285,000 men to shipyards did not solve the 
problem of building ships. A large percentage of these men had to 
be trained. In November, 19 17, this work was organized and two 
methods were adopted: (i) that of training skilled shipyard crafts- 
men to become instructors and (2) that of using these instructors 



as teachers of green men upon the job in the shipyards to which 
they returned. 

Thirty-seven training centers for the training of instructors were 
established, covering all sections of the country. Approximately iioo 
instructors were given the six weeks' training course^ the aim of which 
was to enable them to teach what they already knew. The men who 
had been given the instructor training returned to the seventy-one 
yards from whence they had been sent and started to train workmen 
on the job.^ 

These training courses in the shipyards were brought under the 
control and supervision of the Fleet Corporation by an ingenious 
$i-a-day bonus given to those yards v/ith properly established training 
departments, which was to be shared equally between learner and 
employer if the learner should stay in the employ of the yard for 
seventy-eight days. 

Of the 285,000 which were added to the shipbuilding rolls from 
October, 191 7, to October, 19 18, it is probable that one half went 
into types of work for which little or no training was required. The 
remaining half, or approximately 140,000 in all, did need training. 
How far was this need met by the training system which was set up 
by the Fleet Corporation ? Careful estimates made by the Education 
and Training Section indicate that the 11 00 instructors trained ap- 
proximately 80,000 men, or about 57 per cent of all that needed 

It was possible to do this because it was found that men could 
be trained for shipbuilding trades in a relatively short period of time. 
Statistics from twenty-one yards indicate that the average training 
period for all men was nineteen days.^ 

Table II shows the length of training period by trades. When the 
learners left their training course they were able in the main to hold 
their own with experienced journeymen, while in certain cases they 
even excelled the journeymen in the latter part of their training 
period. The men who were thus taught trades were drawn principally 
from unskilled shipyard work and frorn manufacturing. The fact 

lAll but three of these were steel-ship yards. The system of training was 
not adopted by wood-ship yards to any extent. 

2 1 am indebted for these statistics to Mr. E. E. MacNary, head of the Edu- 
cation and Training Section. 





that these men could be adapted to specific trades in so short a time 
throws an interesting sidelight upon the amount of skill required 
in modern industry under the division of labor. One of the most 
notable contributions to the theory of vocational education was the 
fact that these men were trained on the job at actual processes under 
normal working conditions. Supervised by an instructor, they worked 
m groups alongside of other groups of experienced workmen It is 
noteworthy that they did better work in these cases than when they 
were attached to "school hulls"; that is, hulls upon which only 
learners were employed. 

Table II. Length of Training Period for Twenty Trades in Twenty- 
one Yards, Covering 9700 Men 


Riveters . 
Heaters . 
Ship fitters 
Drillers . 
Reamers . 
Bolters . 
Erectors . 

Average Days 
FOR Each Trape 










Machinists . 

Pipe fitters . 

Regulators . 
Gas welders 
Electric welders 
Burners . . 
Ship carpenters 
Hand calkers 
Tank-testers . 

Average Davs 
FOR Each Tkadf, 








Other educational activities carried through by the Education and 
Traming Section were (i) supplementary industrial training for 
journeymen by means of short courses on the principles of their 
trade; (2) technical education for members of the supervisory 
force; (3) electric welding, in which, through the efforts of the 
Education and Training Section, a new technic was developed as 
well as instructors trained; and (4) foremen-training. 

It IS not too much to state that the education and training carried 
through by the Fleet Corporation was a notable achievement in 
the field of vocational education. 

VII. Health and Sanitation 


It is impossible to appraise fully and accurately the effect on pro- 
duction of the medical and sanitary measures that were fostered by 
the Industrial Relations Division to improve and maintain the 
physical welfare of shipyard workers. But the Health and Sanitation 
Section, which has now become a part of the Public Health Service, 
functioned effectively in dealing with the concrete problems facing 
it. The field sanitary engineers inspected the shipyards every thirty 
days. The section supervised and organized first-aid work for injured 
men and provisions for medical attention, dispensary and hospital 
facilities, medical inspection, and quarantine. It improved the sani- 
tation about the shipyards as to water supply, toilets, sewage dis- 
posal, bathing facilities, pure food, and mosquito extermination. 
State and local communities were directly induced to appropriate 
$672,000 for exterminating mosquitoes in shipbuilding districts, and 
the mosquito nuisance was reported to have been virtually eliminated 
at Hog Island and at the shipyards of Chester, Pennsylvania, 
and Camden and Gloucester, New Jersey. Epidemics of smallpox 
and typhoid fever were successfully handled in seven localities, and 
vaccine and typhus serums were supplied to all yards when needed. 
Special aid was rendered during the influenza epidemic, and where 
the scourge threatened serious curtailment of shipbuilding temporary 

hospitals were erected. 

A comprehensive survey of medical and sanitary conditions in 
shipyards has also been recently undertaken, with a view to having 
a basis of facts upon which to proceed henceforth. Much remains 
to be accomplished before adequate sanitary standards may be said 
to obtain in every shipyard, but the measures already pursued have 
been of decided educational and material advantage. 

VIII. Safety Engineering 

The newness of the industry, the inexperience of the men and the 
management, and the haste with which shipyards were constructed 
and ships built would be expected to lead to a vastly increased rate 
of personal injuries to ship workers. In the early months of the war, 
indeed, signs were not wanting that such was the case. The stories 
about the dangerous character of the work which were so widely 


circulated in the late months of 19 17 and the early winter of 19 iS 
were not wholly products of enemy propaganda. In many cases they 
but mirrored the true condition of affairs. 

The work of the Safety Engineering Section in meeting this situa- 
tion has been most notable. Although established in January, 19 18, 
it was not until the creation of the Industrial Relations Division 
that its district organization was authorized and began to function. 
Prior to this time only 8 per cent of the shipyards had safety or- 
ganizations. The district safety engineers made it their practice to 
begin by interesting the officials of a shipyard company. Central and 
departmental safety committees were then promoted, and in yards 
which were large enough safety engineers were appointed by the 
company. Safety conferences and committee meetings were held, at 
which the district safety engineers made addresses. Pamphlets were 
distributed and bill posters exhibited, all emphasizing the necessity 
of safety measures to the employees. Surveys of yard conditions 
were conducted, and standard safety specifications 'for plant con- 
struction and equipment were furnished to all yards. On January i, 
19 1 9, over 70 per cent of the yards had safety organizations, or nearly 
a nmefold increase over the number six months before. 

It is possible to compare the pre-war accident rates with those of 
the war period after safety measures had been partially set up 
Chaney and Hanna's study of accident and accident prevention in 
marine building shows that in steel-ship yards in 1912 there were 
217.8 accidents causing loss of a day's work or more for every 1000 
full-time workers per year, or 18.2 per month.^ Statistics gathered for 
the last quarter of 19 18 from twenty-four typical steel yards employ- 
mg over 100,000 men show the following accident frequency per 1000 
workers in attendance per month: 2 

Month „ Accident- 

Frequency Rate 

October . . . 


November . . r 

_ 6.0 

December ... o 


These statistics show a decrease in accident frequency to a point 
slightly over one third of the former rate. 

^"Accidents and Accident Prevention in Machine BuUding," U. S Bureau 
of Labor Statistics, Bulletin No. 216, p. 30. 

2 This includes men working in shipyards on both hulls and boilers. 


The frequency rate computed on the same basis for forty-one wood- 
ship yards, employing approximately 3 5, 000 men, was as follows: 


]^oi^TH Frequency Rate 

October 9-5 

November ^ ^ -4 

December 9-^ 

It is important, however, not only to ascertain the decline in the 
frequency of accidents but also to determine whether the relative 
severity of accidents decreased. As is well known, a standard weight- 
ing system for accidents has been devised by Dr. Chaney. A sub- 
stantially similar one was used by the Safety Engineering Section, 
so that the results are comparable.' Dr. Chaney found that in steel- 
ship building in 19 12 accidents caused a loss of eight days for every 
full-time worker per year, or 0.66 days per month." 

The accident-severity rate per month during the last quarter of 
19 1 8 for the twenty-four steel-ship yards furnishes an interesting 
comparison with this. accident-Severity 

Rate (Days per 
Month Month) 

October 0-79i 

November o-4oi 

December 0.444 

It will thus be seen that the severity rates, with the exception of 
October, were substantially lower than in the pre-war period. 

In the forty-one wood-ship yards, however, the record was not 
so favorable. accident-Severity 

Rate (Days per 
Month Month) 

October i-^72 

November o-97o 

December o-899 

ijf anything, the rating adopted by the Safety Engineering Section was 

slightly more severe, 

2 This should not be interpreted to mean that these days were actually lost 
during the specific year or month. It merely means that accidents which 
occurred during this time caused either during that year or in future years a 
loss of this amount of time. For instance, Dr. Chaney rates a death as 9000 
working-days. Thus the loss of time due to this accident would be spread over 
thirty years. 


Although more detailed statistics are not available for months since 
December, 19 18, the facts at hand seem to indicate that there has been 
a somewhat steady decrease in the frequency and severity of accidents. 
It seems probable that, as a result of safety measures, from 12,000 to 
13,000 fewer accidents occurred during the last quarter of 1918 alone 
than would have occurred had the pre-war conditions existed.^ Such a 
showing is all the more remarkable when the sudden expansion of the 
industry and the addition of nearly 300,000 "green men" is considered. 

The reduction of accidents effected by the Fleet Corporation, how- 
ever, not only saved many lives and much human loss but also 
materially reduced the labor cost to shipbuilding companies and thus 
to the Fleet Corporation. Sixty-nine shipbuilding companies were 
enabled to secure a reduction in their insurance premium because of 
the safety measures introduced at the instance of the Safety En- 
gineering Section. This reduction totaled in all several millions 
of dollars.- 

IX. The Instability of Labor 
Table III shows the labor turnover from January to September, 
1918, for 90 representative companies, which in September em-' 
ployed 273,632 shipbuilders. The table shows the following: 

I. That the turnover for the country as a whole was at an annual 
rate of over 200 per cent in practically every month. In some months 

' While reading the proof of this article, a further study by Dr Chaney ap- 
peared which affords a basis for further comparison. Dr. Chaney, after a study 
of the 191 7 accident rates in several long-established shipyards, finds that, though 
the accident-frequency rates decreased from 217.8 for every 1000 full-time 
workers per year as in 1912 to 60.9 in 1917, the accident-severity rates increased 
from 6.6 to 10.8. It is probable that the newly established yards had a much 
higher frequency rate in 191 7 and the early part of 1918 than these long- 
estabhshed yards and that their accident-severity rate was as high if not hi-her 
The work of the Safety Engineering Section, therefore, appears to be even more 
effective than indicated above as respects the decrease in the severity of acci- 
dents, although it is possible that its influence in causing a decline in the fre 
quency of accidents was not as great as might be expected from the 1912 figures 
For the later study of Chaney 's, see U. S. Bureau of Labor Statistics, Monthly 
Labor Review, Vol. VIII, No. 4 (1919), p. 16. 

2 As has been explained, the increased labor cost caused by the decisions of 
the Adjustment Board was ultimately paid for by the Fleet Corporation The 
mcrease m wages necessitated a consequent increase in insurance premiums 
which was chargeable against the Fleet Corporation. A reduction of the insur- 
ance premium, therefore, decreased the amount which the Fleet Corporation was 
compelled to reimburse. 



it was as high as 30c per cent. In other words, it was necessary to 
hire from three to four men in a year in order to increase the working 

force by one.^ 

2. The turnover for wood-ship yards was slightly less than that 

for steel yards. 

3. The turnover for the three fabricating yards ^ was the highest of 
all types of construction, averaging 447 per cent for the nine months. 

4. The turnover was heaviest in the Pacific Coast yards and those 
north of Chesapeake Bay, while it was lightest in the yards of the 
Great Lakes and those of the ]\Iiddle Atlantic district (Chesapeake 
Bay to Wilmington, North Carolina). It is not an accident that the 
districts where the turnover was the heaviest were those where there 
had been the greatest violation of the Macy scale and the heaviest 
competitive bidding for labor by the shipyards. 

5. The turnover was lightest in the winter months and increased 
during the late spring, summer, and fall. It is difficult to tell whether 
this was purely a seasonal variation or whether it was due to the 
competitive bidding for labor in excess of the established scale. This 
latter factor made the situation worse as time went on.^ 

iThe method of calculating the labor turnover was as follows: The number 
of shipbuilding employees on the pay roll for each week during each month 
was added, and the sum was divided by the number of weeks in the month. 
This method secured the average number on the pay roll. The average number 
of shipbuilding employees on the pay roll was divided into the number of ship- 
building employees replaced during the month, giving the turnover percentage 
for the month. The monthly turnover percentage was reduced to a yearly basis 
for purposes of uniform comparison by multiplying the monthly percentage by 
the factor 10.4 (that is, 25 divided by 5) when five weeks were included in the 
month, and by 13 (that is, 52 divided by 4) when four weeks were included in 
the month. When the pay roll was increasing, the number of men replaced 
would be the number lost from the pay rpll (in operations), while when the 
pay roll decreased the number of men replaced would be the total number hired. 

2 Fabricating yards are so termed because there is no fabricating done at 
them ! The parts are prepared at various other plants and shipped to these 
yards, where they are assembled. The term "assembling yards" would be much 

more accurate. 

3 Dr. Boris Emmet's study in an automobile establishment indicates that the 
labor turnover in that plant uniformly increased during the spring and summer 
months and decreased during the winter. This may be due to the greater preva- 
lence of employment during the summer months, which entices workmen from 
job to job, while in the winter they feel that they should hold on to whatever 
jobs they have. See "Labor Turnover and Employment Policies of a Large 
Motor Vehicle Manufacturing Establishment," U. S. Bureau of Labor Statistics, 
Monthly Labor Review, Vol. VII, No. 4 (1918), pp. 1-18. 



Table III 

Turnover Percentages for Shipbuilding Employees 

(Yearly Basis) 


North Atlantic 
Delaware River 
Middle Atlantic 

Great Lakes 
North Pacific 
No. II 

South Pacific 
Fabricating yards 
All districts 

North Atlantic 
Delaware River 
Middle Atlantic 

Great Lakes 
North Pacific 
No. II 

South Pacific 
Fabricating Yards 
. All districts 

No. OF 

























X Qf 



z < 

o ^ 


X :j 




Steel-Ship Yards 













































No steel-ship building companies in this district 





















No steel-ship building companies in this district 






Description of districts: North Atlantic— all yards north of Newark New 
Jersey; Delaware River— all yards on Delaware River; Middle Atlantic— all 
yards on Chesapeake Bay, Potomac River, and Atlantic Coast from Baltimore, 
Maryland, to Wilmmgton, North Carolina; Southern — all yards from Wilmine- 
lon, North Carolina, to Mississippi River; Gulf-yards west of Mississippi on 
the Gulf; Great Lakes— all yards on Great Lakes; North Pacific— all wood- 
ship yards m Washmgton save those on the Columbia River (which are in 
District II) and all steel-ship yards in Washington and Oregon; District 11 — 
all wood-ship yards in Oregon and on Columbia River, save those of Coos 
Uay ; bouth Pacific— all California yards and those of Coos Bay, Oregon. 

Turnover is not the only factor in the instability of labor. Though 
absenteeism is often confused with turnover, it is really a separate 
item. Absenteeism differs from turnover in that while turnover 


represents a changing of positions, absenteeism represents the ab- 
sence from a position while one is employed. 

Table IV shows the percentage of attendance of all employees (not 
shipbuilders alone) in 90 representative companies. These com- 
panies employed over 320,000 workmen in September, 1918.^ 

Table IV. Average Percentage of Pay Roll in Daily Attendance 

FOR All Employees 

No. OF 













a X 

Y < 

















C 3 

X 3 














Steel-Ship Yards 

North Atlantic 

7 ' 








83-3 78.3 


77 -o 



Delaware River 









85.7 81.2 





Middle Atlantic 









74.6 80.2 














86.4 85.9 






No steel-ship building companies in this district 

Great Lakes 















North Pacific 















No. II 

No steel-ship building companies in this district 

South Pacific 







92.5 88.8 



88.7 90.7 



Fabricating yards 








87.2 83.4 





69.8 81.5 
77.7 84.0 




All districts 




Wood-ship Yards 

North Atlantic 



76.7 1 83.1 84.0 86.2 87.8 86.8 88.6 80.5 80.0 86.3 



Delaware River 

No wood-ship building companies in this district 

Middle Atlantic 













































Great Lakes 















North Pacific 






93 -o 


91. 1 





No. II 









93-3 92-4; 91-1 



South Pacific 




89.1 1 90.1 193-2 194-2 192-7 

1 95.1 I92.6 88.9 




Fabricating yards 

No wood-ship building companies in this district 

All districts 



84.1 86.8 



! 88.6 








iThe method of computing attendance figures was as follows: The average 
daily attendance for each week is calculated by adding the attendance for all 
the davs of the week save Sunday, and dividing by 6. The ratio of this average 
daily attendance to the total number on the pay roll expressed m percentage 
gives the average attendance. The difference between this and 100 per cent is 
the amount of absenteeism for the week. To reduce this to a monthly basis, 



It must be clearly realized that this percentage of absenteeism 
merely measures the number of full days lost. It does not include 
absenteeism resulting from (i) half-days absent and (2) tardiness 
The real amount of absenteeism, therefore, is probably greater than 
that mdicated by the statistics given. 

The following facts appear from Table IV : 

I. That the percentage of days lost per month for the country as 
a whole ranged in steel-ship yards from 26 to 13.3 per cent and in 
wood-ship yards from 15.9 to ii.4percent. The average absenteeism 
for the nine months in the steel-ship yards was 17.8 per cent • in 
the wood-ship yards, 13.2 per cent. 

2 That absenteeism was approximately 25 per cent less in the 
wood-ship yards than in the steel-ship yards. 

3. That absenteeism was higher in the winter months than in the 
spring and summer. This was particularly true of the steel yards 
Climatic reasons were undoubtedly a large factor. 

4. That absenteeism is highest in the yards of the Northern At- 
lantic States and lowest in those of the Pacific Coast. Here again it 
IS probable that the equable temperature of the Pacific Coast was 
responsible in a large part for the better showing made by these yards. 


I. Principles Underlying the Labor Policy of the Fleet 


Had the managers of the Fleet Corporation been asked, "What is 
the philosophy upon which your rulings and policies are based?" 
they w^ould probably have replied, "We have none. We are here *to 
build ships. Speed was their aim. They wanted results. The multi- 
tude of questions that poured in upon them were decided, therefore 
m the light of this purpose and not by a priori theories. From the 

LTar'are "eated'af fn Th^'T " 'f ^"^'' "'^^^^^ ^^^ ^^^^^ ^--^ 
weeU t J K ? ^"cJ^dmg five weeks and eight months as including four 
weeks, the aim being to make the weekly periods and the monthly periods cob 
cide as evenly as possible. The percentage of attendance for the elective 
number of weeks m the month is added, and is then divided by the number 
of weeks, which gives the average attendance for the month 




accumulation of their decisions, however, the student can detect cer- 
tain fundamental principles being crystallized and an inductive 
industrial philosophy being formed, of which the promulgators them- 
selves were almost unconscious. 

There were really two basic principles upon which the labor policy 
was based, the implications of which were perhaps grasped by only 
a few : ( i ) The first of these was that the hearty support and cooper- 
ation of labor was necessary to attain any modicum of success. 
( 2 ) The second was that the ordinary peace-time method of competi- 
tion between shipyards was not only inadequate to build the neces- 
sary ships under war conditions but was, on the whole, an actual 

Shipbuilding in war time demonstrated the importance of the 
worker. It was possible in peace time, with the plentiful labor supply, 
to take less account of labor, but it was impossible in war, for the 
success of the whole program depended largely upon the zeal and 
efficiency of the laboring men. The Fleet Corporation could not wash 
its hands of its labor problem by delegating its responsibility to its 
contractors, and could secure the cooperation of labor not by auto- 
cratic commands but only by taking the workers into its confidence 
and by jointly sharing with them the settlement of their problems. 
The creation of the Shipbuilding Labor Adjustment Board was the 
most important recognition of this truth which any great industry 
in America has ever made, and throughout the administration of 
labor matters by the Fleet Corporation it was found absolutely essen- 
tial to secure the cooperation of the workers themselves. Many of 
the charges that the workmen have been "coddled" come from 
those who do not understand the significance of labor which the war 
has revealed. Such statements are based upon the implicit belief that 
the workers should do what is ordered by economically stronger 
classes and that they should be servants of the state but not members 
of the state. 

The other basic principle, namely, the supplementing and restrain- 
ing of competition, did not manifest itself so quickly, but it emerged 
after a time as a necessity. 

It was necessary to supplement competition, because the work per- 
formed by the Education and Training, the Safety Engineering, and 
the Health and Sanitation sections, together with the Employment 







Management Branch and other agencies of the Corporation, would 
never have been performed by the shipbuilders themselves, for the 
following reasons : 

I. While it was for the interest of the industry as a whole that 
these facilities should be provided, it need not have been for the 
interest of any particular yard to perform these functions. If an 
employer, for instance, provided training for his men at his own 
expense, there was every likelihood that some other shipyard which 
had not undergone the expense of training men would offer these 
men, once trained, more than their original emplover could pay and 
would thus entice them away. The offering of these advantages by 
a central agency, such as the Fleet Corporation, however, relieved 
any individual yard of the burden and extended these facilities to 
the industry as a whole. Though the movement of newly trained men 
from yard to yard still continued, nevertheless the industry as a whole 
possessed these trained workmen, a gain which would hardly have 
materialized had the Fleet Corporation depended upon the initiative 
of mdividual employers to furnish them. 

2. It was necessary for the Fleet Corporation to provide these 
services not only because it was not to the economic interest of 
mdividual shipyards but also because of the ignorance on the part 
of many shipbuilders of what was actually to their economic interest 
It was not easy for the owners to understand that good health 
safety measures, and efficient employment methods meant an in-' 
creased output. The Industrial Relations Division performed valu- 
able educational work in impressing the necessity for these measures 
upon indifferent and even hostile concerns. 

3. By reason of the nation-wide extent of the organization im- 
provements in matters relating to labor could be pooled and 'then 
quickly extended to all other plants instead of being confined to a 
few. Illustrations of this can be drawn from such diverse items as 
the invention of an appliance which lessened the vibration in riveting 
methods of managing plant cafeterias, and a plan devised by one 
district representative of organizing shop committees. 

The officials of the Corporation slowly learned, moreover that 
competition must be restrained as well as supplemented. This was 
first learned in the supplying of raw material to the shipyards It was 
necessary to centralize the purchasing and distribution of steel of 

Shipyard labor administration 


lumber, and of other materials, because each plant tried to "play 
safe" and accumulated more than it needed. Some yards were con- 
sequently unable to get the raw materials that they needed. It be- 
came almost equally necessary to restrain the competitive methods 
of attracting labor. The treating of the Macy rates as maxima as 
well as minima was only one step in the attempt to prevent firms 
from enticing labor from other shipyards. The Corporation expressly 
forbade a concern to take men intentionally from other yards, it used 
all its influence to punish yards which had so offended, and it tried 
to bring about the return of the men who had been enticed away. 

In the fall of 19 18 the Corporation found it necessary to regulate 
advertising for labor, which many concerns were conducting in- 
judiciously, and it issued a General Order regulating advertising, 
which is perhaps unique. By it shipyards were forbidden to state 
any special advantages in the form of wages or working conditions 
and were required to state that they would not employ anyone 
working in another shipyard.^ 


II. Defects and Merits 

So great was the necessity for haste that it is small wonder mistakes 
were made in building up from nothing a system of labor administra- 
tion and control. Rather is it remarkable that the mistakes were 
upon the whole so few, and that the conspicuous merits far out- 
weighed them ; but both mistakes and merits alike are of distinct 
service in pointing out what labor policy a nation should pursue in 
war time and in peace time as well. 

Among the most important defects were : 

I. Delay in setting up an adequate administrative machinery to 
enforce the rates authorized by the Shipbuilding Labor Adjustment 
Board. It is perhaps an American characteristic to enunciate a 

1 The restrictions imposed were as follows : 

1. Every advertisement, whether for skilled or unskilled labor, must contain 
the following statements: "No one working in an Emergency Fleet Shipyard 
should apply. Wages and working conditions arc the same in all such shipyards." 

2. No advertisement, whether for skilled or unskilled labor, shall state 
(fl) number of men needed; {b) rate of pay; (c) the amount of overtime or 
rate of compensation for overtime; {d) housing, welfare work, or similar in- 
ducements; {e) inducements in violation of the wages and standards fixed by 
the Shipbuilding Labor Adjustment Board. 


policy and then neglect to provide machinery to see that it is carried 
out. The Fleet Corporation and the Adjustment Board shared in this 
American vice. A more thorough organization with several full-time 
men in each district should have been created early. The Corporation 
was relatively slow to realize the necessity for a separate system of 
labor control with administrative decentralization. Had this been 
in existence earlier, the violations, both those above and those below 
the Macy rates, would have been fewer. 

2. A rather loosely administered system oj reimbursement for 
added labor cost. There can be little question that many yards were 
reimbursed, temporarily at least, for amounts in excess of the actual 
Macy scale. This was partially caused by a shortage of competent ac- 
countants, which rendered the work of detecting these amounts more 
difficult, and the necessity for training more and better accountants 
was thereby sharply emphasized. 

3. A too liberal contract system. Though the contracts for the 
Fleet Corporation probably protected the government more than 
those of other government departments, yet many were unduly fa- 
vorable to the contractor. The cost-plus-percentage contracts, the 
number of which became fewer as time went on, directly encouraged 
extravagance in labor matters upon the part of the contractor, while 
the cost-plus-fixed-fee contracts and agency contracts, where the 
Fleet Corporation bore all the expense, did not sufficiently discourage 
such extravagance. Costs were often unduly swollen, and an ex- 
travagant attitude was created toward labor matters. 

4. Failure to provide an adequate labor-requirements machinery. 
The Fleet Corporation should have established relatively early a 
staff to estimate the labor requirements of the various yards and 
the country as a whole, concerning the number and kinds of men 
needed at varying periods of time. This should have been roughly 
computed from the estimated production program as it varied, 
although the uncertainties in the program would have rendered the 
work exceedingly difficult. Such estimates could have been checked 
up by estimates from the yards themselves. This system would have 
furnished the United States Employment Service with an accurate 
list of labor requirements and would have guided the various activ- 
ities of the Corporation, as, for instance, the Education and Training 
Section and other sections. Had such a section been in existence the 



Shipyard Volunteers' fiasco might have been avoided. It is only fair, 
however, to say that such a centralized system of labor requirements 
had never been created in the country, and it is not wholly proper 
to reproach the officials of the Corporation for having failed to create 
such machinery de novo. 

5. Failure to acquaint all groups with the real policy of the Fleet 
Corporation and Adjustment Board. In a country as large as the 
United States the cooperation of all parties cannot be obtained 
merely by the action of committees representing both sides. It is 
vitally important to educate and inform the rank and file of both 
employers and employees as to the reasons for and necessity of the 
policies and methods adopted. 

The fundamental merits of the work must also be remembered, 

however : 

1. The necessity of recognizing the principle of collective bargain- 
ing and of granting labor a voice in the determination of its own 
conditions was demonstrated beyond a doubt. 

2. For the first time a great government industry realized the 
necessity for a separate and coordinate organization to deal with 

labor problems. 

3. It was shown that industrial disputes not only should be settled 
after the fact but should be headed off by a thorough examination 
into and removal of the basic causes of labor unrest. Not only did 
this policy prevent interruption in production but it increased the 
efficiency of the men while at work. 

4. The industry was viewed as a whole, and measures were taken 
to supply the needs of all plants, instead of depending upon the 
self-interest of the individual contractor to furnish the services for 

the industry. 

5. The principle of basing wages upon increase in the cost of living 
was officially recognized and applied throughout an important in- 
dustry. Whatever may be the inadequacies in merely maintaining 
the status quo of a standard of living which may have originally been 
too low, there can be no question that it was a big improvement over 
what would have happened had the market system of adjusting wages 
been followed, with all its accompanying friction. Had not the Fleet 
Corporation interposed, there is little doubt that the standard of 
living, instead of being maintained, would have been impaired. 


6. During the period after the Shipbuilding Labor Adjustment 
Board and the Industrial Relations Division were functioning and 
pnor to the signing of the armistice, there were no strikes or lockouts 
save of momentary character, in yards doing work for the Fleet 
Corporation.' Industrial peace was thus roughly attained This 
should not be understood to mean that there were no rumblings of 
discontent, but merely that no actual interference with production 
occurred during hostilities. When the temper of both employers and 
workmen is considered, this is perhaps the most outstanding proof of 
the success of the efforts of the shipyard labor administration There 
can be little question that had it not been for the Labor Adjustment 
Board and the Industrial Relations Division the tonnage built would 
have been less by several hundred thousand tons 



The Shipbuilding Labor Adjustment Board, though its duration 
was not limited by either of the memoranda creating it, was dissolved 
on April I. During the months of February and March many efforts 
were made to devise some machinery to take its place. The peace- 
time problem is naturally different from that of war if for no 
other reason than that the shipyards will soon be producing pri- 
marily for private and not for government account. By July i of 
this year the wood-ship yards will be practically through with Fleet 
Corporation work, while 30 per cent of the steel-ship yards formerly 
occupied on government work will be freed for private construe- 
tion. By December, 1919, over 60 per cent of the steel-ship ways 
will so be free.= ^ -^ 

The Emergency Fleet Corporation therefore could no longer nre- 

thTl? 'tV'J'k ',"."'"' " " '""' "^^^ ^^^P^'l^d to do during 
the war. The shipbuilders themselves, who had not been parties to 
the formation of the Board, were the only ones who could enter into 
a general agreement with the unions. 

2 The prohibition upon the buildin^ of stepl ^hinc f/^r f«^ • 
as yet been rai<«>H hut it ;= o I !:.v. ^^ ^^^ foreign account has not 

ab >ei oeen raised, but it is expected that t will be very shortly 



After a series of conferences it seems to be undoubted that several 
boards will replace the Adjustment Board. After a stormy two weeks' 
conference in Washington between representatives of the local unions 
and employers from the Pacific Coast, together with representatives 
of the international unions and the Fleet Corporation, an agreement 
was drawn up providing for the creation of a board for the Pacific 
Coast with ten members, with a continuation of the principal con- 
ditions established by the Adjustment Board, save that the forty- 
four hour week was established for the entire year, and not merely 
for the summer months, as at present. The board, if constituted, 
will have power over wages, hours, conditions of labor, classification, 
grievances, etc. The local coast unions will undoubtedly have a 
larger voice in representing labor on this board than the inter- 
national unions, and thus one cause of friction will be removed. 
This agreement has been approved by the employers and will 
be voted upon by the local unions, by whom it will undoubtedly 

be rejected. 

Although some employers on the Atlantic Coast and Great Lakes 
are refusing to sign collective agreements with the American Fed- 
eration of Labor, it is probable that the vast majority of them will 
do so. The American Shipbuilding Company, a concern with six 
yards on the Great Lakes, has already signed such an agreement. 
The two agency yards of the Fleet Corporation (the American Inter- 
national Shipbuilding Corporation at Hog Island and the Merchant 
Shipbuilding Corporation at Bristol, Pennsylvania) have also signed 
such an agreement, as have the various plants of the Bethlehem 
Shipbuilding Company. Many others are about to fall in line, 
and it is probable that from these individual agreements district 
boards for the Atlantic Coast and Great Lakes will ultimately 

be built up. 

Until some machinery is set up and functioning, the Emergency 
Fleet Corporation will maintain the rates and conditions of labor 
established by the Adjustment Board and will probably use these 
rates as the basis of reimbursement for all its contract settlements, 
although of course yards may out of their profits pay the workmen 
more than the scale. 

Whatever boards are set up will be based upon and will take over 
the principles and policies established by the Labor Adjustment 


Board and the Industrial Relations Division. Thus in this newest 
of mdustnes, perhaps chiefly because of the lack of long-established 
business inertia, the governmental policies evoked under the stress 
of war-time pressure are to be taken over as the basis for future 
peace-time action. One, at least, of war's gains is apparently to be 
made permanent. rr- ^ ^ 

P. H. Douglas 

Emergency Fleet Corporation 

F. E. Wolfe 

Ohio Wesleyan University 





AT THE Convention of the American Federation of Labor in 
l\ 19 1 8 the following resolution was adopted on the recom- 
mendation of the Executive Council: 

Betterment for wage-earners under all circumstances depends upon 
the control they exercise through economic organization. Control 
brings with it responsibility. The right of workers to a share in the 
results of increasing production, which makes possible their advance- 
ment and reproduction under proper conditions, means greater interest 

in increasing output. 

The Executive Council believes that in all large permanent shops 
a regular arrangement should be provided whereby : 

First, a committee of the workers would regularly meet with the 
shop management to confer over matters of production ; and whereby : 

Second, such committee could carry, beyond the foreman and the 
superintendent, to the general manager or to the president any im- 
portant grievance which the workers may have with reference to 
wages, hours, and conditions. 

It is fundamental for efficiency in production that the essentials 
of team work be understood and followed by all. There must be 
opportunity for intercourse and exchange of viewpoints between 
workers and managers. It is this machinery for solving industrial 
problems that is fundamental. 

The constructive demands outlined above are predicated upon the 
basic principle of the right and opportunity of workers to organize 
and make collective agreements. There is no other way to brmg 
about cooperation for production except by organization of workers. 

1 From Proceedings of the Thirty-eighth Annual Convention of the American 
Federation of Labor (1918^, pp. 85, 329, 330- 




Organization is the orderly system for dealing with questions which 
concern labor in order that decisions and adjustments may be reached 
that further the best interests of all concerned. Employers and 
workers must talk over matters of mutual interest and reach under- 
standmgs. In present large-scale industry this can be done only 
by the use of the representative system, or what is commonly called 
collective bargaining, which is the foundation of all effective just 
labor administration. 

This was followed at the Convention of 1919 by the following • ^ 
Resolution No. 2oi--By request of the National Committee for 
Organizmg the Iron and Steel Workers. 

Whereas, Many steel corporations and other industrial institutions 
have mstituted in their plants systems of collective bargaining akin 
to the Rockefeller plan ; and « s 

Whereas, Extensive experience has shown that while the employ- 
ers are busily carrying on propaganda lauding these company unions 
to the skies, as a great improvement over trade-unions, they are at 
the same time just as actively enforcing a series of vicious practices 
that hamstring such organizations and render them useless to their 
employees. Of these practices the following are a few : 

'• ^^^^J^t^!5^ifIBM^^ first essential for the 

proper working of a genuine collective-bargaining committee is that 
It be composed entirely as the organized workers may elect and 
altogether iree from the company's influence. Only then can it be 
truly representative of the men and responsive to their wishes. Upon 
such committees bosses, representing as they do the antagonism of 
the company are so much poison. Not only is it impossible for 
them personally to represent the men but they also negate the in- 
fluence of the real workers' delegates. Knowing this very well, the 
steel companies, through campaigns of intimidation and election fmud 
load their company-union committees with bosses, usually to the 
point of a majority. So baneful is this practice that were the com- 
pany unions otherwise perfect it alone could suffice to entirely destroy 
their usefulness to the workers. 

2. Kg democratic orpomzation ^prwiff^^ if .v ^ ^ , , 

fiiQf :Jr^r:r— -.^^-5<^^-^^^^^^ ^^ ^^ common knowledge 

tnat in orderToTtne workri'TTrr^yri^ .u „ -r , 

uic workers tomrmTat a uniform understanding 


through the systematization and formulation of their grievances and 
demands it is necessary for them to enjoy and practice the rights 
of free speech, free assembly, and free association. They must con- 
duct an elaborate series of meetings under their own control and 
generally carry on their business in a democratic, organized way. But 
with the company-union system this is impossible. All independent 
organization and meetings are prohibited on pain of discharge. Conse- 
quently the workers are kept voiceless and destitute of a program. 
They are deliberately held down to the status of a mob. Under such 
circumstances intelligent, aggressive action by them is out of the 

3. jMtanjMaiionjJjiimm^ As part of the general plan to 
keep their company unions from being of any possible service to their 
employees it is customary for the companies to summarily discharge 
committeemen who dare to make a stand in behalf of the workers. 
The records show a multitude of such cases. Being unorganized, the 
men are powerless to defend their representatives. The natural conse- 
quence is that the committees soon degenerate into groups of men 
supinely subservient to the wishes of the company and deaf to those 

of the workers. 

4. Ex^erl^sshtance projiibtted. When dealing with their em- 
ployees in any manner, employers always thoroughly safeguard them- 
selves by enlisting the aid of the very best brains procurable. The only 
way the workers can cope with this array of experts is to have the 
help of experienced labor leaders, but under the company-union 
system this is impossible. All association with trade-union officials 
is strictly prohibited. The company reserves to itself the right to 
expert assistance. As a result the green workers' committee, already 
weakened in a dozen ways, is left practically helpless before the 
experts upon the company's side. 

5. Company union lacks^Joi^. In establishing wages, hours, 
and working conditions in their plants employers habitually use 
their great economic power to enforce their will. Therefore, to secure 
just treatment the only recourse for the workers is to develop a 
power equally strong and to confront their employers with it. Unless 
they can do this their case is hopeless. In this vital respect the 
company union is a complete failure. With hardly a pretense of 
organization, unaffiliated with other groups of workers in the same 


industry destitute of funds, and unfitted to use the strike weapon 
.t is totally unable to enforce its will, should it by miracle have one 
favorable to the workers. Weak and helpless, all it can do is to 
submit to the dictation of the company. It can make no effective 
fight for the men. 

6. ^ompany diverts aim. As though the foregoing practices were 
not enbUgh fo thoroughly cripple the company unions, the employers 
make assurance doubly sure by seeing to it that their committees 
Ignore the vital needs of the workers and confine themselves to minor 
and e.xtraneous matters, such as fake safety-first movements, prob- 
kms of efficiency, handing bouquets to high company officials, etc 
Discussions of wages, hours, and working conditions are taboo on pain 
of discharge for the committeeman who dares insist upon them Thus 
^e company unions complete their record of deceit and weakness by 
dodging the labor question altogether. 

Whekeas, In view of the foregoing facts, it is evident that com- 
pany unions are unqualified to represent the interests of the workers 
and that they are a delusion and a snare set up by the companies f"; 
the express purpose of deluding the workers into the belief that 
they have some protection and thus have no need for trade-union 
organization ; therefore, be it 

uJITI'T'a'^^^' ^^ disapprove and condemn all such company 

anTbetfStrr ^"^ '"''''"'''' " '''' "°"^'"« ^'^ ^^ ^^^ '^-' 

throu'hT' ?'t • T f '"'"' ''^ "■^'" '° ''^^Sain collectivelv 
through the only kind of organization fitted for this purpose- the 



A TRADE-UNION," according to one authority, ''is a continuous 
association of wage-earners for the purpose of maintain- 
ing or improving the conditions of their employment." ^ A trade- 
union, although usually including benevolent and fraternal features, 
is something more than a mere fraternal order which might easily be 
a continuous association of wage-earners. The purpose of maintain- 
ing or improving conditions of employment involves means and ends 
and a more or less fixed policy which makes an organization a trade- 
union. Trade-unionism involves collective bargaining as over against 
individual bargaining for wages and conditions of employment and 
the use of the strike as a weapon of last resort in enforcing demands. 
A number of American trade-unions began as mutual benevolent and 
fraternal societies and have become under economic pressure regular 
labor organizations. A similar development is now going on in a 
number of organizations resembling in some respects trade-unions, 
and it is the purpose of this paper to show if possible by the study of 
concrete instances the trend of this development. 

The dividing line between fraternal or beneficiary organizations 
and trade-unions seems to lie in the matter of collective bargaining 
and in the attitude towards strikes. The National Association of 
Stationary Engineers, for example, which was organized in 1882, lays 
stress upon educational and beneficiary features and declares that 
"this Association shall at no time be used for the furtherance of 
strikes, or for the purpose of interfering in any way between its 
members and their employers as to wages." ^ Strikes, moreover, it is 
urged, are unnecessary because of the identity of interest between 

iFrom Quarterly Journal, University of North Dakota, Vol. IX (i9i9)> 
pp. 16Q-180. 

2 Sidney and Beatrice Webb, History of Trade Unionism, p. i. 1902. 

^The National Engineer, February, 1904, p. 34; Preamble, Constitution 
(1914), p. 3. 



employer and employee. To this the trade-unionist would say that 
educational and beneficiary features are useful, and that there is an 
identity of interest up to a certain point, but that without collective 
bargammg it is impossible to utilize the legitimate power of com- 
bination that comes with trade-union organization. Moreover, col- 
lective bargaining would be the rule, and strikes would be abolished, 
as soon as an industry should become completely unionized. 

The trend of present-day development may be readily seen by an 
examination of the policies of various organizations which, on account 
of more or less similarity, may be divided into the following four 
groups: (i) organizations whose members are employed directly bv 
the federal government; (2) unions formed of men holding federal 
licenses; (3) train-service organizations whose members are em- 
ployed on the railroads; and (4) a miscellaneous group at various 
stages of development. 


In this group are found such organizations as the National Fed- 
eration of Post Office Clerks, the Brotherhood of Railway Postal 
Clerks the National Federation of Postal Employees, the Railway 
Mail Association, the National Association of Letter Carriers and 
the United National Association of Post Office Clerks These are 
all fraternal and beneficiary associations whose aim is to cooperate 
with the postal department as to classification, wages, hours of labor 
and the upholding at all times of civil-service rules.^ Most of these 
organizations have developed into regular trade-unions and have 
affiliated with organized labor "despite Postmaster General Burieson's 
known opposition and declaration concerning the menace in postal 
unions. ^ 

The National Federation of Post Office Clerks is a typical illustra- 
ton of he development of postal unionism. Beginning as merely a 
fraternal and beneficiary organization, it became a regular trade- 
union primarily through need of affiliation with organized labor to 
secure through combined effort better working conditions and higher 

^Z- . .T''"^ '^^^"' ^^ ^^" Federation is shown by its being 
affiliated with the American Federation of Labor, by the fact that itJ 

1 Constitution, Letter Carriers, 1911, Article II. Section i. 



objects are the social and economic advancement in every lawful way 
of its members, and by its sympathy with the trade-union movement.^ 
However, at its national convention in 191 1 a resolution was adopted 
putting it "on record as most emphatically opposed to strikes in the 
postal service as a means to bring about the improvement of working 
conditions in the service." ^ A "Post Office Appropriation Bill," 
passed in August, 191 2, provides that membership in associations 
like the foregoing " shall not constitute or be cause for reduction in 
rank or compensation or removal of such person or groups of persons 
from said service," provided they are " not affiliated with any outside 
organization imposing an obligation or duty upon them to engage in 
any strike, or proposing to assist them in any strike, against the 
United States." This, according to President Nelson, of the National 
Federation, legalizes the right to affiliate with the American Federa- 
tion of Labor, because that body does not require any affiliated body 
to strike nor does it propose to help any body in a strike against the 
United States. Legislation and not strikes is held to be the last 
recourse of public employees in settlement of grievances.^ This right 
of organization carries with it the further right to petition and agi- 
tate for remedial legislation, which had been denied to some extent by 
the federal officials. The contention of the union officials is that 
bad conditions brought about the organization of the union and that 
their aim was amelioration by peaceful methods, and so they are 
opposed to strikes. "As a matter of fact," said President Nelson to 
a Congressional committee, "in the Chicago post office before our 
union came into existence we practically had strikes. The men after 
working fourteen hours on a stretch refused to work any more ; they 
walked out and deliberately rang the Bundy clock and went home,-- 
seventy-five of them,— and they could not get men to take their 
places'"* In reality, these organizations, whether affiliated or not 
with the American Federation of Labor, are in many respects trade- 
unions and are recapitulating— the eariier stages at least— the devel- 
opment of many regular trade-unions. It should be borne in mind, 
also, that the government postal employees in France went out on 

1 Constitution, 1910, Article II. 

2 Proceedings, 1911, p. 37; The Union Postal Clerk, January, 1912, p. 14. 

^The Union Postal Clerk, August, 1912, p. i. 

*Ibid. December, 191 1, p. 8. 

i. . 



strike in 1909, and the railroad employees, composed partly of gov- 
ernment and partly of private lines, in 1910, and that this latter 
strike was broken only by calling the men to the colors. 


Here are found such organizations as the National Marine En- 
gineers' Beneficial Association and the American Association of 
Masters, Mates, and Pilots. Their members are required to have a 
federal license to engage in their calling and are subject to govern- 
ment inspection. The conduct of all such licensed officers is subject 
to investigation by the Local Board of Inspectors, which has power 
to suspend or revoke licenses. Section 4449 of the Revised Statutes 
ot the Lnited States reads: 

If any licensed officer shall, to the hindrance of commerce wrone- 
ully or unreasonably refuse to serve in his official capacity on any 
steamer as authorized by the terms of his certificate of license 0^ 
shall fail to deliver to the applicant for such service at the time o 

asstn?nf 1. '^VZ '^''' ^' "''"''"'"'' ^ ^'^tement in Zing 
assigning good and sufficient reasons therefor, or if any pilot or 

person whom the master or owner of the vessel may desire to place 
there for the purpose of learning the profession, his license shall be 

rrrtto sucVsr ^"^'"^^ ^^ '-' p^°^'^^^ ■■" °*- -- '' 

This law is said by some to deny the right of striking and to put 
these organizations into the list of nonstriking ones. President 
William F. Yates, of the National Marine Engineers' Beneficial 
Association, however, speaking concerning the right of federal control 
says m an official letter that "no officer of the inspection service has' 

"Z 'f "h rr^'f ' f '° '"^^ ' """ '^'"^^^ t° «<^«P' employment, 
and If he (officer) asks such questions he should be told emphatically 

that It IS none of his business.'" Then he goes on to say that the 
language of the section just quoted "has been taken by some members 
of the inspection service, owners, attorneys, and others to mean that 
a licensed officer may be compelled to enter the employment of any- 
one who needs his services, and this meaning or interpretation is 
absurd in the opimon of good lawyers, and I'd like to see th/. man 

' Proceedings, igio, p. 297. 



who could press me in his service against my inclination in the 
matter." The contention is that a marine engineer or other licensed 
officer has no "official capacity" on any vessel except he be in the 
employ of the owners or agents, and the plain intent of the law is to 
prevent a licensed officer who is regularly employed on a vessel from 
wrongfully or willfully refusing to do his duty in either refusing to 
remain on a vessel when required or quitting on eve of departure. 
"Any other construction attempted," says President Yates, "should 
be fought to the bitter end." 

This association was in fact, if not in name, a trade-union, because 
its rules provided that no subordinate association could either go on 
strike or change its scale of wages without the knowledge and consent 
of the National President and Advisory Board.^ Likewise most of 
the troubles or strikes of this organization have been in connection 
with the making of a scale of wages.^' Although emphasizing collective 
bargaining, the Marine Engineers asserted in 1910 that they did 
not^'affiliate with other labor organizations because "if engineers live 
up to the part of licensed officers they need no such alliance and that 
such would be harmful to both.""^ There were, therefore, no sym- 
pathetic strikes in their organization. Even as to strikes, the rule 
had been enacted that the word "strike" must be eliminated from 
the records of each subordinate association.* The feeling, how- 
ever, continued to grow that the interests of the Association and 
its members were being discriminated against on account of their 
isolated labor position and that they were failing to gain the benefits 
and rights accruing to other organizations through combined effort, 
and so the matter of affiliating with the American Federation of Labor 
became urgent.^ At the convention of 1916, after considerable dis- 
cussion and questioning a representative of the Federation as to obli- 
gations involved, it was voted to take a referendum vote of the entire 
membership on the matter of affiliation.^ The result was 2933 for 
and 1236 against affiliation. On account, however, of jurisdictional 
differences with the steam engineers, the machinists, and other unions 
as to who should do certain work or make repairs, the acceptance 
of the charter was held in abeyance until the convention of the 

1 Constitution, 1907, p. 27. 

2 Proceedings, 191 1, p. 485- 
'•^Id. 1910, p. 143. 

4 Constitution, 1907, P- 27- 
•'■'Proceedings, 191O, p. 22. 
^Ibid. pp. 44, 57- 



Association in 1917.^ It is interesting to note that a resolution for the 
creation of a defense fund was rejected because of " the opinion that 
the fact that a defense fund was in existence would cause our mem- 
bers to become careless and aggressive. "=^ Opposition to the Marine 
Engmeers' coming into the Federation continued, and at the con- 
vention of 191 7 the National Executive Committee was authorized to 
contmue negotiations with the view of securing an acceptable charter. 
Durmg 191 7 negotiations continued, and finally a conference with 
the protesting international unions was arranged to be held during 
the Buffalo convention of the American Federation of Labor The 
conference was held Monday evening, ^November 19, 1917 between 
representatives of the Marine Engineers and of the protesting organ- 
izations mvolved, namely, the International Association of Machin- 
ists, Brotherhood of Boilermakers and Iron Ship Builders United 
Association of Plumbers and Steamfitters, and International Brother- 
hood of Electrical Workers. After considerable discussion an ami- 
cable adjustment concerning the division of work was reached and 
the protestmg unions withdrew their objections. The charter was 
issued on December 14, 1917, and so, as a result of a movement 
begun m 1903, the Marine Engineers became affiliated with the 
American Federation of Labor.^ 

The American Association of Masters, Mates, and Pilots is like- 
wise composed of licensed officers, and its development may be 
brought out briefly. Although for many years a trade-union in every- 
thing but name, it did not become affiliated with the American Fed- 
eration of Labor until 1916, and then only after much agitation and 
discussion and the defeat of a similar movement in 191 1* The 
officials of the Association denied for some years that it was a trade- 
umon^ In spite of the idea that a licensed officer was in a special 
class by himself, the feeling grew that "the best interests of this Asso- 
ciation require that it be affiliated with the American Federation of 
Labor m order that its objects and purposes be more fully and com- 
pletely attained." Such a resolution was passed at the 1916 conven- 
tion and subsequently sustained by a referendum vote of the entire 

^Minutes of the Executive Committee, July, 1916, p. 26 
2Proceedmgs, 1916, p. 52. v , f ". 

Vu' ^'^'iT "^"f^^' '^'^' PP- 4°^-406; 1918, pp. 308-337 
^Master, Mate, and Pilot, March, 1911, p. 486. 



membership.^ On account of this action a dual organization, em- 
bracing the higher officers in ship service and known as the Ship- 
master's Association, has been formed by some seceding members,— 
an evident example of persistent individualism. 


This group is made up of the train-service organizations whose 
members are employed on the railroads. These are the Brother- 
hood of Locomotive Engineers, the Brotherhood of Locomotive 
Firemen and Enginemen, the Brotherhood of Railroad Trainmen, 
and the Order of Railway Conductors of America. All have had a 
common origin and a similar development, as will be brought out. 

The Brotherhood of Locomotive Engineers is the oldest organ- 
ization in this group. It was organized as the Brotherhood of the 
Footboard in 1863 and reorganized the next year under the present 
title. During the first ten years the Brotherhood developed fraternal 
and beneficiary features and had a few local strikes, although these 
were discouraged by the officials. In 1874 the president was deposed 
as being too much of a pacifist and was succeeded by P. M. Arthur, 
who continued at the head of the organization until his death in 1903. 
While conservative in his policy, Mr. Arthur declared: "We are 
opposed to strikes and will not resort to them unless forced to do so 
by the arbitrary actions of our employers. It is our only hope when 
moral suasion fails."" Wage agreements and arbitration rather than 
strikes were emphasized. Strikes were necessary at times, because 
some railroad officials were imbued with the ideas of absolute mon- 
archy. An engineer, for instance, was discharged and went to the 
superintendent and asked, "Will you be kind enough to tell me 
what I am discharged for?" and received the answer: "You are dis- 
charged, are you ? Well, that is conclusive evidence that the com- 
pany doesn't want you."^ A campaign of education and the use of 
the strike when necessary brought about better relations. The great 
strike on the Buriington Railroad in 1888 is said to have been caused 
by "a narrow view of master and servant all along the line. They 
were the masters and the road was their kingdom to manage, and no 

1 Proceedings, 1916, pp. 73-74- 

'Locomotive Engineers' Monthly Journal, December, 1876, p. 55. 

^Ibid. May, 190S, P- 393- 


interference or arbitration could be allowed." ^ The result of this 
most bitter and prolonged strike in its history revealed the strength 
of the Brotherhood and made it easier to get along with the railroad 
companies by peaceful means. 

The Brotherhood of Locomotive Firemen and the Brotherhood of 
Railroad Trainmen have had much the same development, as will be 
indicated briefly. The Brotherhood of Locomotive Firemen was 
organized in 1873 as a mutual benefit association and did not become 
a distinct labor organization until 1885, when a protective policy was 
adopted, much against the wishes of its officers.- Likewise, the 
Brotherhood of Railroad Trainmen, organized at Oneonta, New York, 
in 1883 as the Brotherhood of Railroad Brakemen and changing its 
name in 1SS9, has had much the same development as the other 

The most pronounced and dramatic development in this group 
is that of the Order of Railway Conductors of America, organized 
m 1868 and continuing as a purely fraternal organization until 1891. 
The Conductors stood on the policy adopted at the convention at 
Elmira in 1877: "Temperance and total opposition to unlawful and 
violent uprisings of employees, termed 'strikes.'" At the same time a 
resolution was passed unanimously that any brother engaging in a 
strike should be expelled, and that a notice of the same with the 
cause therefor should be sent to all railroad superintendents within 
reach of the division secretary. Another resolution at the same con- 
vention provided that " the names of all members expelled for drunk- 
enness or engaging in a strike shall be published in the magazine."* 

The year 1877 was marked by violent railroad strikes, and the 
resolutions quoted probably were caused by a reaction from the same 
Still, in 1882, Grand Chief Conductor G. S. Wheaton declared that 
the weaker party succumbs in every strike and that there are no gains 
through strikes and coercion, and in the convention of the same year 
the platform adopted ran : " Reserving the right to prosecute our own 
business according to the dictates of our own conscience, and within 
the law, according to every other man the same right." ^ The next year, 

'Locomotive Engineers' Monthly Journal, October, i8q6, p 880 
-Locomotive Firemen's Magazine, June, 1910, p. 843 
•^History by D. L. Cease, p. 5. ' ^ ' ^ 4J. 

^Proceedings, 1885, p. 739. =7rf. 1882, p. 507. 



1883, a circular was issued stating that the Order was uncompro- 
misingly opposed to strikes or coercive measures.^ At the Louisville, 
Kentucky, Convention, in 1885, a resolution was passed and embodied 
in the Constitution providing that in order to obtain recognition in 
the matter of obtaining favors and adjusting grievances the division 
or divisions interested should select a member or members as a com- 
mittee to wait upon the general officers of the railroad company, and, 
if refused, to ask the Grand Chief Conductor of the Order to call 
on the officers and endeavor to effect a settlement. It was made 
obligatory on the Grand Chief Conductor to comply with such a 
request in every case, and the expenses attending same were to be 
borne either by the division or the individual making the request.' 
This marked a change of the Order from a mutual fraternal society 
to a labor organization, and it was so designated by Grand Chief 
Conductor Wheaton at the New Orleans Convention in 1887. The 
movement for making the Order a factor in the adjustment of 
grievances marked by this opening wedge continued, and the culmina- 
tion came in the removal of the law against strikes and the election 
of E. E. Clark, who represented the progressive element, as Grand 
Chief Conductor at the convention at Rochester, New York, in 1890.^ 

A good deal of the subsequent growth of the Order was due to 
the wise and energetic policy of Mr. Clark, who served until 1906, 
when he resigned to accept an appointment on the Interstate Com- 
merce Commission.* Just before the removal of the no-strike law a 
demand for an increase of wages on the New Albany Railroad was 
met by its superintendent in refusing with the words, "You cannot 
strike"; but the conductors replied, ''We can quit," and the result 
was that they received the increase demanded.^ A strike in 1890 
and another one in 1891 showed the necessity of some definite strike 
rules, which later were enacted at the 1891 convention modeled to a 
large extent on those of the Locomotive Firemen.^ These rules re- 
main substantially the same to this day, and other actions of the 
convention placed the Conductors on the basis of a labor organization. 

These four train-service brotherhoods, beginning as fraternal and 
beneficiary orders merely, have thus become under prevailing 

1 Proceedings, 1883, p. S9S- 

2/d. 1885, p. 787. 

3/d. 1890, pp. 136, 276. 

4/d. 1907, p. 46. 

^Id. 1890, p. no. 

6/(i. 1 89 1, pp. 43-49, 341-347. 


,f ti I 


industrial conditions regular trade-unions— business unions pure and 
simple— which, on account of their strategic position in the railroad 
industry and consequent advantage in bargaining power, have found it 
unnecessary to affiliate with other unions, except that at times they 
have taken in the Order of Railroad Telegraphers in a wage demand. 
On account of their independent position they are sometimes called 
the aristocrats of the trade-union world, and their strength may be 
seen in the passage of the Adamson Act in 19 16 by Congress, grant- 
ing the eight-hour day and extra pay for overtime in order to avert a 
concerted strike on their part throughout the United States. 

In this fourth group is found a number of organizations at various 
stages of development recapitulating the experiences of the organi- 
zations in the preceding groups. In this group tendencies are not 
so clear, and some of the movements are not fully developed as yet. 
One type of organization is that made up of state, county, and city 
employees, and thus including to some extent men of special training 
and education. These include such unions as the Bridge Tenders' 
Union, City Firemen's Union, City Highway Employees, Health Offi- 
cers' Association, Housing Inspectors, Municipal Employees, School 
Custodians and Janitors, Sidewalk Inspectors' Association, State 
Hospital Employees, and the National Federation of State, County, 
and City Employees. These are, for the most part, locll unions 
affiliated directly and not through an international union with the 
American Federation of Labor. A movement for the unionization of 
policemen has been proposed recently in Boston. Police Commis- 
sioner O'Meara voiced his strong opposition to the movement in 
that while a union of some public employees might be a matter of 
doubtful propriety, one of policemen would mean an abandonment 
of an impartial attitude on account of affiliation with an outside 
organization and so not to be allowed.^ However that may be, the 
recent strike of the London police is of interest. The New Statelman 
of September 7, 1918, states the issue thus: 

We regret that the police were compelled to strike but we 
heartily congratulate them upon their victory. Their grievances were 
mamfold, and if, after years of "victimization," stern refusal, and 
^Boston Evening Transcript, June 29, 1918, p. 2. 



procrastination, they decided that nothing but a strike could brmg the 
authorities to reason, they had plenty of grounds for their belief. A 
very brief, and on the whole very orderly and good-tempered, demon- 
stration was all that was necessary. It was too late to try to hit at 
the Union once more by wholesale dismissals ; the public and the 
newspapers (though shocked) were uniformly sympathetic with the 
strikers • Mr. Lloyd George was staggered to find, quite suddenly, 
that a force he believed to live in paradisal content was thoroughly 
discontented ; and the Government made a swift climb-down. Before 
the strike the minimum wage was 30 5., with a war bonu^ of 12 s. and 
a 25 dd. allowance for children; the total has now been increased 
by 135. There is also to be a noncontributory pension for widows. 
Recognition has not been accorded in terms, but the Union Executives 
were met by Mr. George as the men's representatives, and ex-P. C. 
Thiel provisional organizer of the Union and delegate to the London 
Trades Council, is to be restored to the post from which he had been 
dismissed for taking part in "an unauthorized association." This 
means that if "recognition" has not been given in words, it has been 
given in all save words. 

Librarians, school teachers, and college professors have generally 
regarded themselves as professional men and women. The Library 
Employees Union has, however, been organized in New York City. 
A similar movement in Boston has been criticized on the ground that 
" it has from time immemorial been the rule among professional men 
and women that an organization of themselves to advance wages is 
unprofessional and undignified."^ The most advanced movement in 
this group is found in the American Federation of Teachers, organ- 
ized April 15, 1916, and affiliated with the American Federation of 
Labor, which, on November 18, 1918, included thirty-three local 
unions stretching from the Atlantic to the Pacific, with one in the 
Canal Zone. A local union of more than three hundred women teach- 
ers was organized at St. Paul in June, 1918, during the convention 
of the American Federation of Labor. Another local union has just 
been formed by the faculty of Howard University, Washington, D. C, 
the first among the colleges. The ideal of the movement is " democ- 
racy in education ; education for democracy." Evidently there seems 
to be a reason for this movement, for as one teacher said to the writer, 
"We have tried literary clubs, social organizations, and teachers' asso- 
ciations and they have not gotten us anywhere, and now we are going 
^Boston Evening Transcript, May 22, 1918. 






to try a trade-union." An example of results obtained is shown in 
the Chicago school situation, where a school board has been legislated 
out of office and a new one substituted largely by the help of^'organ- 
ized labor and other liberal elements. A statutory guarantee of ten- 
ure during efilciency has also been obtained. The old board had 
passed a rule forbidding membership of teachers in organizations 
affiliated with labor, or any other organizations that might be specified 
at any time in the future at its caprice. It had also passed a rule 
abolishing tenure based on meritorious service and had dropped sixty- 
eight teachers. In such a case as this it is necessary for teachers to 
combine and affiliate themselves with other organizations and not 
stand weak and alone. The discharged teachers who belonged to the 
Federation were all reinstated and have continued their local organiza- 
tion (Chicago Teachers' Federation) without reaffiliation with or- 
ganized labor, from which they withdrew for the time being as a 
matter of policy. The alliance of teachers with trade-unionism is 
a sign of present economic conditions and should arouse considerable 
interest. The American Federation of Teachers, however, is not a 
mere bread-and-butter movement, as is shown by its program of 
educational and social reforms.^ 

In conclusion it may be said that the economic conditions of the 
present day are such that organizations beginning as fraternal and 
beneficiary ones become under economic pressure trade-unions. The 
younger organizations seem but to recapitulate in their growth the 
development of the older ones. Among the larger organizations 
studied the exception seems to be the National Association of 
Stationary Engineers, but even in this organization there has been 
some agitation for trade-union policy and affiliation. 

The question naturally arises: What has become of the spirit 
of individualism which has always been such a prominent factor in 
American life? A partial answer is, of course, that a large number 
of American workmen are not connected with the trade-union move- 
ment although that number is becoming less. But the fact remains 
that If workmen are organized at all the tendency is to become identi- 
fied with the trade-union movement. The notion that because a man 
IS a government employee, or a licensed officer, or a more or less 

C^l^:7lm^^^^^^^ ''''''^'''' '^''^ ''■ ^^^' ^^^- L^"- of President 



skilled workman, or considers himself a professional man, he can 
stand alone under present conditions of industrial and social organi- 
zation, has been weighed in the balance and found wanting. The 
sentiment "I'm a licensed officer and not a trade-unionist" may swell 
a man's pride, but it does not go far in getting help for the passage 
through Congress of a law to better his working conditions. The 
dissenting votes in the various organizations examined show that the 
individualistic feeling is not dead, but the majority votes in favor of 
affiliation with organized labor indicate a recognition of facts and 
show the trend of events. Whether he will or no, the workman of 
today is being forced to organize along trade-union lines and is fast 
developing a strong class consciousness. 

George Milton Janes 

Pennsylvania State College 





WHILE the radical industrial unionists, who favor combining 
all crafts, skilled and unskilled, in an industry, have been 
engaged in controversy with the conservative trade autonomists who 
oppose this policy, a gradual evolution has been taking place in 
consequence of which craft unions are disappearing. Of 133 national 
unions, most of them affiliated with the American Federation of 
Labor, only 28 may be called craft unions, if by a craft we mean work 
requiring identical skill and training. Nor do these figures tell the 
whole story, since about one half of the 28 craft unions are cooperat- 
ing through loose alliances with other related trades in the same 
industry. Yet the disappearance of the craft union does not neces- 
sarily prove the ultimate victory of the industrial union. Only 
5 of the national unions claim jurisdiction over all trades in an 
industry. The remaining 100 are of an intermediate type. They 
unite only part of the trades in an industry. We shall call them 
amalgamations of related trades. 

The history of American unionism reveals, indeed, an occasional 
tendency towards disintegration of related trades. Between 1889 
and 1902 the printing-pressmen, the bookbinders, the photo- 
engravers, and the stereotypers and electrotypers seceded, one after 
another, from the International Typographical Union and formed 
separate organizations. More recently the window-glass cutters 
and flatteners have broken away from the Window-Glass Workers' 
Union. But such instances of disintegration have been comparatively 
rare. Moreover, crafts which were once united and later became 
disunited, as, for example, in the boot and shoe industry, have some- 
times been brought together again. Much more frequent has been 
the amalgamation of related trades by the combination of existing 
»From American Economic Review, Vol. V (1915), pp. 554-575. 



unions, by the extension of the jurisdiction of a craft union to include 
unorganized crafts, or simply by the retention of membership m 
the original organization as the craft has split by division of labor 

into several crafts. 

The amalgamation of related trades has been taking place in the 
United States almost ever since national unions began to appear. 
The machinists and blacksmiths, who were united in the same 
union as early as 1859, managed also to bring the boiler-makers into 
their organization before it went to pieces in 1877. The Sons of Vul- 
can composed of iron-boilers and puddlers, united in 1876 with the 
National Union of Iron and Steel Roll Hands and the Associated 
Brotherhood of Iron and Steel Heaters, Rollers, and Roughers of 

the United States. 

The number of such amalgamations has increased greatly since 
1894 As division of labor has become more minute, trade barriers 
have become less rigid, and differences of skill have been lessened. 
Hence the newly created crafts— if we can still so call them— have 
not only held together but have also affiliated themselves with other 
crafts in the same industry. Integration of industry has been 
another factor. Workers engaged in different parts of the industrial 
process have been brought together under a common management 
and have combined in order to cooperate for collective bargaming. 
Between 1894 and 1904 the various unions of boot and shoe workers 
coalesced as did also those of the hatters and of the textile workers ; 
the union of furniture workers combined with that of the machine 
woodworkers; the Iron Molders' Union absorbed the coremakers; 
and the union of coal-hoisting engineers was merged into the 
United Mine Workers. The period witnessed the rise of the Amal- 
gamated Meat Cutters and Butcher Workmen with its minutely 
subdivided groups of workers, skilled and unskilled, in the meat- 
packing houses. During this decade, also, the United Brewery 
Workmen, the United Mine Workers, and the Western Federation 
of Miners embarked on their- policy of industrial unionism and 
attempted to bring into their organizations all kinds of workers m 

the industry. 

During the ten years since 1904 the movement towards amalga- 
mation of related trades has been accelerated by the rise of the 
Industrial Workers of the World. Both of the labor federations 

•^ ■ 





ht^l^'^h'''' "".f ''''"'''' ''"' ''''' "="''°"^' ""'°" affiliated with 
>K ""/!." "" ^"''^'■■^ '" ^" '"'^"^''y- The growth of these 

F^deat: of 1,1°" '" ""'°"''^''^ stimulated' the American 
Kederafon of Labor to pursue a more liberal attitude towards 
trade ama gamat.on and industrial unionism. The attitude of the 
dommant fact.on in the American Federation of Labor has indeed 

aTliedT: h"" ™"r'- ""^^ '^™ "''^'^ autonomists," wh"cht 

.sm But nntT' " r.'" '"'-^'"''"^- ^''^>' "PP"- -dustrial union- 
ism. But not even the most conservative of the older labor leaders 

Z^^::l''r'''r '"' '""^°'^ "^ ''^ P-' -uld dS s 
J cr-,T • •'"' ?"" ^'"""°"^ °f •^^''^^ "- '° forbid all fusion 

close V rlL" .'" " k"'""- "^^^ f^"°^ '"^ amalgamation of 
dosely related trades, but are inclined to broaden very slowly 

the,r ,„ erpretation of the words "closely related." They have been 

^pecally reluctant to encourage the absorption o^ unskiild 

tnbut on of a craft employed in several industries among a corre- 
spondmg number of industrial unions 
In times past the American Federation of Labor has been opposed 

auildmg Trades Council. It opposed the latter organization not 
because U objected to such cooperation between related trades bu 
because the International Building Trades Council refused to affl 
.ate wuh a and yet was settling jurisdictional disputes in he buildS 
trades, mamtaining sympathetic strikes, and fumning oth r fun S 

er lionTf Lab^ T^ °™^-h' ''" T '' '^^^'' '^ ^'^ American f! 
made aleenl ^""'r 'V '''^American Federation of Labor 
made a sneeping assertion at the convention in 1901 regarding this 
conflict of function. "There is nothing" he said "fnr v. ? .v. 

International Building Trades Cnnn.n !, , ' "^""'^ "'^ 

i.uuuiu^ iraaes Council can dec are which has n^^f 

been more effectually exercised and more clearly acWeVedbv the 

American Federation of Labor." Such a statement is an exa—ion 

since the group of related trades has interests in common wCch.' 

general labor federation will not promote. Nevertheless, The alliance 

head^rart't c":^d'r:tre;tJh'"f '^' ^"^""^ °' '"^ w-^i "- 

broke away from the^par „t gStion ^:1ZT) '" °'''"\ ™^ '^"" 
bearing the same name. ^^"'^ation in 1908 to form a rival federaUon 


of some of the national unions of the building trades was very prob- 
ably ^Takened by their greater interest in the dependent federation 
of ^e trades in their own industry. The American Federation of 

Labor contented itself at first merely with oPP^-T-.ttTTr d- 
structive policy was inaugurated in 1903 when the Metal Trades 
Fd radon composed of machinists, blacksmiths, patternmakers 
^ n molde., and'other metal trades, was made a depart-nt o Uie 
American Federation of Labor. Subsequently, a building-trades de 
payment, a mining department, and a department ra way em- 
nloyees were created. Only the railway shop crafts are at present 
unifed in the railway employees' department, but the ultimate purpose 

is to combine all railway employees. r»^»r,finn of 

Recently the party in control of the American Federation of 
Labor has shown a tendency to pursue a more liberal policy regard- 
ing the organization of the unskilled. This is illustrated by the 
fforts to form unions of migratory and other unskilled workers and 
by he sanction given in rgxa to the plan of the shingle weave^ to 
include all workers, skilled and unskilled, in the lumber industry^ 
The majority in the American Federation of Labor are still opposed 
to industrial unionism. For some time, however, there has been a 
steadily increasing minority desiring industrial unionism, and at 
r cent conventions of the general labor federation they have ma n- 
Ta^ed a strong though unsuccessful fight for the adoption of resolu- 
tions favoring that method of organization 

Should the amalgamation of related trades include all or only a 
part of the crafts in an industry? Should the government by which 
such related trades are united be a centralized amalgamation practi- 
cally identical with that of the national craft unions which it replaces 
or should it be a loose alliance or federation in which the national 
c aft unions continue to retain their existence? To answer hese 
questions we must consider, first, the reasons for uniting related 
trades ; secondly, the relative advantages and disadvantages of cen- 
tralized amalgamations and loose confederations ; and, thirdly, the 
kinds of related trades which have tended to unite. 

An important reason for uniting a group of related crafts has been 
the need of cooperating to maintain strikes against a common em- 
ployer. Strikes are much more effectual if all wage-earners m indus- 
Irial establishments, including many not affected by the dispute, may 




be ordered to quit work simultaneously. When the great strike in 
the meat-packing houses of Chicago was declared in the summer of 
1904, the stationary engineers and stationary firemen, who have 
separate organizations from the other employees, remained at work 
Had they quit, the strike would not have failed, sav the leaders 
of the Amalgamated Meat Cutters and Butcher Workmen With 
a large supply of meat in the refrigerators to satisfy current de- 
mands, the packers could view with equanimity the prospect of a 
cessation of work for many days. But if the stationary engineers 
and the stationary firemen had struck and so closed down the ice 
plant in the refrigerating department, they would have had to 
make terms within a few hours. The engineers and firemen did 
apply to their organizations for consent to strike in sympathy with 
the butchers, but some days elapsed before permission could be 
obtained. When they did finally strike, the packers, anticipating 
such a movement, had already secured engineers and firemen to take 
their places. 

Again, strikes of employees in a single department of a factory 
often fail because the employees in other departments can be kept 
busy by having the work of the strikers done in some other estab- 
lishment. For example, if the compositors in a printing office 
declare a strike, but the printing-pressmen remain at work, the pub- 
lisher may have his composition done by nonunion workers in some 
other office, the forms or stereotyped plates being handled by his 
own pressmen. Employers united in opposition to the union fre- 
quently put themselves to considerable inconvenience to help one 
another in an emergency. It was the desire to put an end to such 
practices on the part of employers which led to the amalgamation of 
three national unions of iron and steel workers in 1876 WTien the 
iron-boilers and puddlers went on strike, the heaters and rollers were 
kept at work by supplying them with muck iron made by nonunionists 
in other places. For this reason the great Pittsburgh strike of boilers 
and puddlers failed in 1875 ; and, because of its failure, this group 
of workers, highly skilled, strongly unionized, and withal much in 
clmed to hold aloof "from entangling alliances," was converted to 
the plan of amalgamating all trades in the iron and steel mills 
into one union.' 

^National Labor Tribune, Pittsburgh, January 2, 9, April 10, ,875. 


Without cooperation between the related crafts in an industry, 
strikes of a single trade fail because, in order to keep the plant m 
operation and thus remain employed, the members of other trades 
do the work of the strikers or instruct nonunionists how to do it. 
Thus, in times past, locomotive firemen have run engines during 
strikes of locomotive engineers ; and locomotive engineers, on their 
part, have taught strike breakers how to perform the duties of 
locomotive firemen. Undoubtedly, unions would be able to bargain 
much more effectively for better working conditions if the agree- 
ments or contracts of all trades in an establishment expired at the 
same time, if the demands of the several trades were presented jointly 
to an employer, and if a refusal to comply with these demands 
caused every employee in the establishment to quit work. 

On the other hand, strikes of a single trade which cannot be readily 
replaced are unfair to the other related trades in the ind-f try since 
such a single trade, even though composed of only a handful ot 
journeymen, can often shut down a large plant and throw out of em- 
ployment hundreds of workmen who have no voice in the matter. One 
reason why the International Typographical Union wishes to retam 
control over the machinists in the printing office is because a strike 
on their part may abruptly halt all activities and throw the other 
workers out of employment. 

Strikes of a single trade are unfair to the group which wages them 
when other workers in the factory who have not helped to wm the 
strike must share the fruits of victory. If a group whose presence 
is necessary for the running of a factory labors only eight hours a 
day the other employees must also suspend work at the end of the 
eighth hour. In consequence, when the trades in an industry are 
organized into separate unions, one of them may bear the brunt of 
a long and severe struggle to secure improvements which will also 

benefit the others. ,• , i, „„«. 

A group of trades which jointly produce a single article benefit 
greatly by uniting to boycott "unfair" firms and to extend, by means 
of the unL label, the sale of goods made in " fair" shops. Attempts 
of each trade to maintain independent boycotts cause much con- 
fusion. Thus, the printing-pressmen may be urging the public not 
to buy the newspaper of a publisher, while the printers, to whom 
the same publisher has accorded excellent conditions, may be urging 



the public to buy it. One reason why the brewery workmen became 
enthusiastic advocates of the so-called "industrial union" was be- 
cause of the conflict in maintaining boycotts which occurred when 
the various trades were organized into separate associations. Simi- 
larly, when each trade in an industry has a separate label, conflict is 
inevitable. Thus, if one of the trades in a particular factory is 
organized and the others are not, the union of the unorganized trade 
will object to the efforts of the organized union to extend the sale of 
the goods made in that factory by means of the union label The 
various organizations of boot and shoe workers amalgamated in i8g? 
because of the great need of cooperating to maintain a single label ' 
After four trades in the printing industry had split off from the Inter- 
national Typographical Union, local alliances of the printing trades 
m each community became necessary, primarily to promote harmony 
in the use of the union label. 

Another reason for amalgamation and federation of related trades 
IS the movement of workers from one craft or division of a craft to 
another. Instances of crafts whose members are recruited from other 
trades are numerous. The ranks of the locomotive engineers are 
replenished from the locomotive firemen. A railroad brakeman may 
become later a railroad conductor. The pressman's assistant rises 
to the position of printing-pressman. The cigar-maker of ability learns 
enough concerning the varieties of tobacco and the making of the 
cigar to do the work of the cigar-packer. Many carpenters and 
cabinetmakers enter the craft of patternmaking. In the large meat- 
packing houses, in the coal mines, in boot and shoe factories = and 
in other industries division of labor is lessening the amount of skill 
required, and journeymen pass readily from one kind of work to 
another. Under such conditions the various groups of workers must 
combine to control the supply of the labor in the industry and to 
prevent disastrous competition for employment between members of 
different unions. The combination of related trades solves also the 
difficulty created by the refusal of journeymen who change their 

^The Laster, Lynn, June 15, iSgr, p 2 

=^The Boot and Shoe Workers' Union adopted the following in 1004- "Mem 
bers working at one branch of the trade are entitled to change to another" 
branch, provided the local union having jurisdiction over tharb anch canno 

f.:^.rz:T%r °' '^ "^^"'^^^" ^^^^^ ^-^-' ^-<- BoTn 


trade to sever their connection with the union of their former craft 
in order not to lose the right to its sick, death, and other benefits. 
Thus, many locomotive firemen after becoming locomotive engineers 
retain their membership in the union of the locomotive firemen. The 
Brotherhood of Locomotive Engineers pays benefits of adequate 
amount, but the average age of its members is higher than the average 
for the union of locomotive firemen, most of whose members are 
young men. Hence the death and disability rate of the Brotherhood 
of Locomotive Engineers is larger and the cost of maintaining its 
benefits is greater. Because of this additional cost, young locomotive 
firemen who have received their promotion are reluctant to join it. 
When railway conductors become too old to perform their responsible 
duties efficiently they are often employed by the railroad company 
as switchmen. These men are frequently too old to become bene- 
ficiary members of the Switchmen's Union and they insist on retain- 
ing their membership in the Order of Railway Conductors. Of course 
when part of the members of a trade belong to one organization and 
part to another, their, ability to bargain effectively with employers 

is greatly lessened. V^ 

Another advantage of amalgamation and federation of related 
trades is that it reduces the number of jurisdictional disputes con- 
cerning the right to do certain work. To be sure, trade amalgamation 
has caused many jurisdictional disputes as to membership, since 
many of the old craft unions have waged a bitter conflict against 
the new industrial organizations which have attempted to absorb 
them. But such disputes over membership must be distinguished 
clearly from disputes over work which arise because of the difficulty 
of making clear-cut divisions of labor between the various trades 
which cooperate in production. Thus, not only do the masons lay 
granite and other kinds of stone but sometimes they also cut them. 
The granite-cutters not only cut granite but sometimes they also lay 
it. In a small town the same man often combines the trades of brick- 
layer, mason, and plasterer, or those of plumber, steam fitter, and gas 
fitter. Even in large cities the bricklayer or the plumber may do 
the work of related trades when he cannot find employment in his 
own. The brewer and the brewery driver must handle cooper's tools 
in an emergency, and the cooper in the small establishment does the 
work of the brewer when there is not sufficient cooperage to keep 


him busy. In the small retail store, clerks drive wagons and go out 
for orders when occasion demands. On the other hand, many a 
driver fills at the store the orders which he has taken during- the 
morning and then delivers the goods to customers. Such men fre- 
quently receive a higher wage than either the driver or the ordinary 
clerk. The introduction of machinery, the use of new materials, and 
new divisions of labor are upsetting carefully established trade 
boundaries and are giving opportunity for a plentiful supply of 
jurisdictional disputes. The increasing use of cement has created a 
new group of journeymen, the cement workers, who are waging a 
war of words with the bricklayers about the right to lay artificial 
stone made of cement. Another comparatively new group, the ceramic, 
mosaic, and encaustic tile-layers, are engaged in a controversy with 
the bricklayers as to which of them shall lay tile. The bricklayers, 
the tile-layers, and the cement workers all claim the right to lay 
tile made of cement. Instances might be multiplied. 

When two related trades are organized into separate unions each 
demands a careful demarcation of its work and a strict observance 
of the boundaries thus set. Such a rigid division causes great in- 
convenience both to employer and employee and in many instances 
is impracticable. If after long negotiation a satisfactory dividing 
line is fixed, the adoption of new methods of production is apt soon 
to upset the arrangement. The result is an endless controversy with 
all the disastrous consequences which follow in the trail of such 
internal conflicts. 

On the other hand, if both trades are united in the same union, 
one of them may often do the work of the other without causing a 
serious dispute. If a dispute does arise, it can be effectively settled 
when referred to a common organization whose decision is final for 
both parties. In England, where the stonemasons and the granite- 
cutters are federated in the same union, there exists no controversy 
between them as in the United States, where they are divided into 
separate organizations. To be sure, disputes do exist between Amer- 
ican bricklayers and masons who are united in the Bricklayers' and 
Masons' International Union, but in places where such disputes have 
arisen harmony has usually been restored by the committee on gen- 
eral good, which federates all local societies of the two trades through- 
out the community. If this committee cannot settle the controversy 


it is referred to the international union, "which administers justice," 
says an official of the society, "and prevents another Cain and Abel 
episode." Jurisdictional disputes have been serious blots in the his- 
tory of many American trade-unions, and an important argument in 
favor of trade amalgamations is the possibility that they will prevent 
one large class of such disputes. 

An objection to trade amalgamations is that while related crafts 
have many interests in common, they have other interests which may 
diverge widely or may directly conflict. The difficulty of harmomz- 
ing these diverging or conflicting interests is increased when one trade 
outnumbers all the others added together, since the group havmg the 
majority is apt to use the amalgamation to further its own concerns 
at the expense of the others. Thus, in the United Association of 
Journeymen Plumbers, Gas Fitters, Steam Fitters, and Steam Fitters' 
Helpers, the gas fitters and steam fitters, who are outnumbered by 
the plumbers, complain that often they are not given opportunity 
at local and national meetings to discuss matters affecting their own 
trades and that when given an opportunity they are outvoted by the 
plumbers. They declare that most of the funds are expended in 
behalf of the plumbers, and that most of the legislation adopted is 
favorable to that trade. The stonemasons make a similar complaint 
against the bricklayers. The printing-pressmen and members of other 
trades in the printing industry affirm that they seceded from the 
International Typographical Union because the compositors, who 
preponderated greatly in numbers, gave too little attention to the 

interests of the other crafts. 

This weakness of the trade amalgamation has arisen largely from 
the failure to provide in its form of government for the fact that 
it is a federation of distinct groups. The transition from craft unions 
to trade amalgamations has frequently been so gradual that work- 
ingmen have not been acutely conscious of the need for changing 
the structure of their organizations. Usually the constitution of the 
old craft union has been taken over bodily, often without amendment, 
by the new amalgamation. In most organizations the national offi- 
cers have, sooner or later, been given authority to organize each 
trade or division of a trade in a community into a separate local 
union whenever conditions warrant; but desiring to secure the 
economies of the large local union, they have been slow to exercise 



this discretionary power. Frequently, also, each trade is given care- 
fully weighted representation on executive boards, conference boards, 
and other governmental bodies. Undoubtedly harmony between the 
related trades may be greatly promoted by such provisions, but, 
when identity of interest is slight and divergence or conflict of 
interest is great, some loose form of federation or alliance may 
be desirable. 

Temporary alliances and loose federations of unions of related 
trades are by no means uncommon. Indeed, there are to be found 
all degrees of centralization, from temporary cooperation for some 
specific purpose to complete amalgamation. Temporary cooperation 
usually takes the form of a sympathetic strike. Very probably there 
is no agreement to help one another. Simply, the union of one trade, 
on becoming involved in a dispute with employers, calls for aid 
from other workers in the industry, and the latter respond by agree- 
ing to engage in the conflict. A more advanced stage in cooperation 
is reached when there is a definite permanent agreement to help one 
another. An example of such an agreement is that between the wall- 
paper machine printers and color-mixers and the print-cutters who 
make wall-paper prints. By the terms of this agreement the printers 
and color-mixers promise not to use prints made by nonunion print- 
cutters, and the print-cutters promise not to work for jobbers supply- 
ing wall-paper manufacturers whom the printers and color-mixers 
have declared to be unfair. 

Such promises of two organizations to aid one another are un- 
satisfactory, however, if governmental machinery is not established 
for the purpose of making joint decisions and taking joint action 
concerning matters affected by the terms of the agreement ; and this 
is particularly the case if the agreement provides for cooperation 
by means of sympathetic strikes. In the first place, unless there is 
a joint tribunal to decide as to the expediency of engaging in the 
conflict by one of the affiliated crafts, sympathetic strikes are usually 
ineffective. When the union of one trade notifies the other only after 
the struggle has begun, there is often a long delay while the request 
to strike in sympathy is being considered by the national officers or 
perhaps by each local society of the related craft. Frequently, indeed, 
a strike of one union is practically lost or won before the members 
of another union decide to quit work. 


A second result of the lack of cooperation during the preliminary 
stages of a dispute is that it deprives one union of the opportunity 
to prevent inexpedient or unwise strikes desired by another. When 
the strike has already begun, and when the refusal to help means its 
failure, a strong sense of obligation may force the members of a 
related trade to engage in the struggle against their will. 

A third objection is that unless the related trades bargain jointly 
with employers and make joint agreements, the policy of waging 
sympathetic strikes increases the number involved in each conflict 
without reducing the number of such conflicts. For example, the 
carpenters engaged in the construction of a building declare a strike 
for higher wages, and the members of every other trade on the 
building quit work in sympathy. When this trouble has been ad- 
justed, the plumbers discover that the employer has violated his 
agreement with them, and all trades again go on strike. Next, the 
elevator constructors and the hoisting engineers quarrel as to which 
of them shall run the completed elevator. The other trades take 
sides, and all building operations are suspended until the dispute 
can be settled. Then the business agent of the plasterers' union finds 
that his trade has a grievance and orders everyone to leave the 
building. This is not a very exaggerated picture of conditions in 
the building industry as they existed in Chicago just before 1900 
or in New York during the spring and summer of 1902. Building 
operations were seriously demoralized. The time for the ultimate 
completion of a building was a matter of gamble, with all odds in 
favor of delay. Building contractors, landlords, and the general 
public joined in a chorus of protest against the arbitrary methods 

of the unions. 

A fourth result is to place the unions in the position of breaking 
their contracts. Perhaps an employer has granted favorable terms 
to a union, which agrees on its part to maintain industrial peace for 
one or more years. Then this union becomes involved in a sympa- 
thetic strike to help another trade and violates its agreement. To 
aggravate the offense in the eyes of the public and the employer, the 
members of the union meddle in a dispute which is apparently none 

of their concern. 

Cooperation between unions of related trades reaches a much 
higher stage of efficiency when governmental machinery is provided 


to carry out the terms of the agreement. Sometimes the existing 
officials of the contracting unions are utilized for this purpose, as, 
for example, in the "tripartite agreement" for the regulation of 
sympathetic strikes by the unions of printers, pressmen, and book- 
binders in 1896. By the terms of this agreement the presidents of 
the three international unions visited in person the place where a 
joint strike was demanded or sent a representative to effect a settle- 
ment if possible. When the dispute could not be amicably settled, 
each president referred the matter to the executive board of his own 
association. The three executive boards were equal in size, and a 
majority of the three taken together could declare a joint strike. 
Sometimes special governmental machinery is created to carry out 
the terms of the agreement between two or more unions. Thus the 
wall-paper machine printers and color-mixers and the print-cutters 
have created a joint national committee to control joint strikes and 
joint agreements in every establishment where the wall-paper manu- 
facturer makes his own prints ; in other words, where the two trades 
have a common employer. 

Even greater unity between the related trades is attained when a 
permanent federal government is created not to perform some par- 
ticular function specifically provided for in the written agreement 
but to perform any function which the unions represented in the 
federation may jointly decide, from time to time, to be desirable 
Federations of related trades are either local, national, or interna- 
tional, the so-called international unions having branches in Canada. 
Local federations were formed before national or international ones. 
Thus, while the International Building Trades Council was created 
only in 1897, local federations of building trades existed as early as 
1882 or 1883 in New York, Chicago, Baltimore, Cincinnati, and other 
large cities.^ Movement of workers from one city to another, com- 
petition between employers in different places, and other causes which 
brought about the combination of local into national craft unions 
have likewise operated to superimpose national upon local federations 
of related trades. 

National federations of related trades have been either combinations 
of national craft unions or combinations of both local allied-trades 
councils and national craft unions. In the second instance either of 
^The Carpenter, New York, May, 1882, June and August, 1883. 


the two kinds of constituent bodies may predominate, according to the 
method of representation at the convention of the national federation. 
Thus, at conventions of the International Building Trades Council 
the local councils of allied trades outvoted the national trade-unions 
until 1905, because each one of the two kinds of organizations was 
allowed the same vote. On the other hand, at conventions of the 
National Metal Trades Federation the national craft unions, whose 
voting power varied according to membership, preponderated over, 
the local councils of related trades, each of which had only one vote. 
The national trade-unions claim that when outvoted in federations 
of related trades their power over subordinate societies is greatly 
weakened. Prominent officials of the carpenters, bricklayers, granite- 
cutters, plumbers, and other building trades opposed the Interna- 
tional Building Trades Council for this reason. Not all of the 
national trade-unions in the building industry were affiliated at the 
time with the International Building Trades Council, but the local 
allied-trades councils would still have predominated even if all of 
them had been represented. The national craft unions in the building 
industry have always been decentralized, and the ability of their cen- 
tral governments to control subordinate societies was still further 
lessened when these subordinate branches relied no longer on the 
central government for financial and moral support in time of strikes, 
but secured whatever aid fhey needed from local and national building- 
trades councils. To check this tendency towards decentralization, 
those opposed to the International Building Trades Council or- 
ganized in 1904 the Structural Building Trades Alliance, composed 
only of national trade-unions. Local allied-trades councils were not 
permitted representation at its conventions. In 1905, too late to 
prevent the successful launching of the rival federation, the Inter- 
national Building Trades Council modified its policy by granting to 
the national craft unions a voting power proportionate to member- 
ship, while continuing to allow each local allied-trades council only 
one vote. At present the federation of related trades dominated by 
local allied-trades councils is discredited. Such local councils may 
be given representation at the federal convention, but the national 
craft unions retain the controlling vote. 

The amalgamation is the most centralized form of combination 
between related crafts; but, like the national trade-union, it is a 


federation of local craft organizations, and, as already pointed out, 
its machinery of government is in most respects the same as that 
of the national trade-union. 

The degree of centralization desirable for combinations of related 
trades depends on the number of interests which they have in com- 
mon and the number which conflict. The administration of their 
common interests grows more efficient as they become more central- 
ized ; but the opportunity for friction regarding matters of conflicting 
interest increases also. Thus the government of the amalgamation 
is more efficient than the federation of local allied-trades councils or 
of national craft unions. It has direct control over the local craft 
unions and thus can compel more prompt and faithful compliance 
with its commands than can the federation, which must issue orders 
through intermediate organizations. On the other hand, friction is 
more likely to arise, because matters concerning one craft alone are 
not left to the organization of that particular craft but are considered 
by a joint convention or joint executive board on which all the related 
crafts are represented. 

Before determining the kinds of related trades which should be 
federated or amalgamated, let us first consider the kinds which are 
at present actually united. Amalgamations and federations of re- 
lated trades may be divided broadly into ( i.) those combining trades 
working for the same employers and (2 ) those combining trades work- 
ing usually for different employers. Illustrations of the first are the 
union of employees in carriage and wagon factories, the union of em- 
ployees in cigar factories, and the many other trade amalgamations 
whose members work together in the same industrial establishments. 
An example of the second would be an organization uniting the 
makers of handsaws with the carpenters who use them. These two 
trades never have the same employers, yet the possibility of combining 
them has been considered. 

I. Combinations of trades working for the same employers may be 
subdivided as follows; 

a. Industrial unions claiming jurisdiction over every group of 
workers in an industry, including the unskilled and certain well- 
defined auxiliary trades, such as the stationary engineers, the sta- 
tionary firemen, and the teamsters, who are found in many other 
industries. The number of industrial unions is small. A few have 


recently been formed as departments of the Industrial Workers of 
the World. The most important of the older ones are the United ^ 
Brewery Workmen, the Western Federation of Miners, the United 
Mine Workers, and the Quarry Workers' International Union. 

b. Unions which include only part of the related trades in an 
industry. To this group belong most of the American unions. 
Auxiliary crafts found in other industries are admitted by a few of 
these organizations. Thus, the International Typographical Union, 
which embraces compositors, proofreaders, and mailers, is engaged 
in controversy with the International Association of Machinists 
concerning jurisdiction over the linotype machinists. The theatrical 
stage employees dispute the claim of the union of carpenters and 
joiners to control the stage carpenters and the claim of the Brother- 
hood of Electrical Workers to control the stage electricians. As a 
rule, however, auxiliary crafts are excluded, and so are, usually, the 
unskilled workers. Some of the unions in this group unite only a 
very small proportion of the crafts in an industry. In such instances 
the trades combined are usually more closely related than the others. 
Thus, while the various crafts in the railway industry have always 
been disunited, certain ones which are closely associated in the 
operation of trains are organized in the Brotherhood of Railway 
Trainmen. Similarly, while most of the trades in the printing indus- 
try are organized separately, the several groups of workers engaged 
in bookbinding are united in a single union, and so are, also, the 
stereotypers and electrotypers. On the other hand, some organiza- 
tions in this group have acquired jurisdiction over nearly all the 
trades in an industry. Thus the International Seamen's Union con- 
trols all seamen except the highly skilled marine engineers, mates, and 
pilots, who have refused to affiliate with their less skilled fellow crafts- 
men. ' Some organizations, such as the Molders' Union, claim juris- ^ 
diction over all except the auxiliary trades and the unskilled workers. 
Others include the unskilled but not the auxiliary trades. Thus the 
Cigar Makers' International Union admits workers of all degrees of 
skill, from the person who selects the leaves of the tobacco to the 
one who packs the finished cigars in boxes. The boast of the offi- 
cials of the Amalgamated IMeat Cutters and Butcher Workmen 
of North America is that their organization makes no distinction 
as to skill. The expert who strips the hide from the carcass of 




I I 




the steer and the common laborer who pushes a truck are both 
^ welcome as members. But, in order to escape jurisdictional disputes 
with other organizations, both of these unions refuse to admit 
auxiliary trades. 

2. The second broad division of trade amalgamations, namely 

combinations of crafts working for different employers, contains only 

a few organizations. These unite chiefly trades producing certain 

materials and tools with trades using them. A good example is the 

Umted Brotherhood of Carpenters and Joiners, which includes not 

only the carpenters and joiners employed on buildings in process of 

construction but also the machine woodworkers employed in mills 

where sash, doors, window frames, and other woodwork handled by 

the carpenters are manufactured. Another example was the now 

defunct American Railway Union, which included not only those 

engaged in railway transportation but also the car-builders The 

great Chicago strike of 1894, which caused the destruction of this 

union, was waged to secure better conditions of employment for those 

engaged in building Pullman parlor cars. 

Trades producing materials and tools have few interests in com- 
mon with those using them. The two groups may, indeed, aid one 
another by means of sympathetic strikes. Thus the carpenters may 
aid the machine woodworkers by refusing to use sash, window frames 
or doors manufactured by nonunionists. The wall-paper machine 
printers and color-mixers may aid the print-cutters bv refusing to use 
prints cut by unorganized labor. The bricklayers may aid the brick 
tile, and terra-cotta workers by refusing to lay brick made by non-' 
union workers. But cooperation by means of svmpathetic strikes is 
the only way by which such widely separated trades may help one 
another, and the expediency of even this form of cooperation seems 
doubtful. In the first place, the hostility to the strike declared in 1894 
by the railway-transportation workers in favor of the Pullman-car 
builders indicated that strikes in behalf of such remotely related 
trades are held in much disfavor by the public, even when, as in the 
above instance, all parties were united in the same organization 
Moreover, the employers consider that they have been treated very 
unfairly when their employees, to whom they have granted favorable 
terms, strike in behalf of a trade with which neither party has any 
personal relations. Combination between such remotely related trades 


seems undesirable. If they do attempt to combine, federation or 
merely a written agreement would be preferable. 

A small group of unions, some of which unite trades never haying 
the same employer, are those attempting to combine all workers 
making goods trom the same material. Frequently the manufactur- 
ers of one article do not produce other articles from the same material. 
Their employees compose an entirely separate trade and are never 
associated in the same industrial establishment with the workers on 
the other articles. An example was the Amalgamated Rubber Work- 
ers' Union, which was composed of workers on all kinds of rubber 
goods, such as parts for mechanical appliances, bicycle tires, auto- 
mobile tires, and rubber shoes. The men who make rubber tires for 
bicycles and automobiles possess no special facility for making rubber 
overshoes, nor do employers who manufacture rubber overshoes ever 
manufacture rubber goods for mechanical appliances. In fact, there 
is a territorial division of production. Rubber overshoes are produced 
largely in New England and rubber goods for mechanical appliances 
in other parts of the country, particularly New Jersey. The Amalga- 
mated Rubber Workers' Union was, therefore, an unnatural com- 
bination of groups of workers having no interest in common. Its 
membership, indeed, was always small, and it soon went to pieces. 
Another example is, perhaps, the United Brotherhood of Carpenters 
and Joiners, which absorbed quite recently the machine woodworkers 
and furniture workers and is planning soon to include also the box- 
makers and wooden-ship builders, and which hopes some day to have 
jurisdiction over all woodworkers in North America. Some of the 
trades which the United Brotherhood of Carpenters and Joiners seeks 
thus to unite possess few interests in common, and there is grave 
doubt whether real unity could ever be secured by such a wide- 
reaching organization. r 1 j j • 

The first essential for a successful combination of related trades is, 
therefore that such trades have the same employers. If, in addition, 
such a combination admits neither auxiliary trades nor unskilled 
workers, its desirabilitv will not be questioned by trade-umon leaders. 
In fact, the only debatable question is whether such an organization 
should be a federation of national craft unions or an amalgamation of 
local craft unions. If, as in the printing industry, the lines of demar- 
cation between the trades are rigidly fixed ; and if, because one trade 





outnumbers the others, an amalgamation may disintegrate, as did 
the International Typographical Union ; and if a satisfactory balance 
of power cannot be secured by carefully weighted representation in 
conventions and on general executive boards,- a federation may be 
preferable. If, as in the building industry or the railway industry 
the related crafts have been long and successfully organized into 
separate national trade-unions, there will be much objection to the 
dismemberment of these associations, and the first successful attempt 
at combination will probably be a loose federation. If none of a 
. group of related crafts outnumbers greatly the others, and if the 
r divisions between trades are not rigidly fixed, so that laborers pass 
readily from one kind of work to another, the successful establish- 
ment of an amalgamation may be an easy task 

Two matters of long and bitter controversy that have arisen con- 
cerning combinations of trades working for the same employers have 
related (i) to the admission of auxiliary trades found in a number 
of industries and (2) to the admission of unskilled laborers We 
shall first consider the method of organizing auxiliary trades.' The 

!,l"n ™TH"r'f "''" '^'^^"bution among several industrial 

unions. The trade autonomists favor their combination into a single 
craft union. In behalf of the policy of distributing the members of 
an auxiliary trade among several industrial unions, it may be argued 
that such a craft gains much from its ability to cooperate for purposes 
of collective bargaining with other employees in the same estaWish! 
ment. Trades like the patternmakers, the stationary engineers and 
he stationao. firemen are especially handicapped unless the rdated 
trades aid them by declaring strikes in sympathy, for the reason 
that there are usually so few of these workers'in el^h estfbHshm n 
hat the employer can readily find sufficient nonunionists to take 
heir places. On the other hand, cooperation for purposes of coT 
ectwe bargaining between members of an auxiliary craft in different 
ndus nes IS unnecessary. It is not even needed to maintain uni 
formity of wages since such uniformity is required only between 
ompeting establishments in the same industry. In favor of col in- 
ing the members of an auxiliary trade into one craft union it may be 
argued that the supply of workers in a trade can be effect rregu 

etllTdurtS "'■ "T'"^ "^ ^° ""'■'«'• " distributed Long 
several industrial umons, limitation of apprenticeship is impracticable 


and there is no way of preventing the members in one industry from 
takin" the places of fellow craftsmen in other industries by acting as 
strike-breakers or by offering to work for lower wages. At the same 
time the free movement of the members of the trade from one 
industry to another is checked by the erection of artificial barriers. 

Those members of an auxiliary trade ^vho have had to undergo 
additional training in order to do the work in a particular industry 
are affected very indirectly by the total supply of workers m the 
craft and hence may amalgamate very profitably with other em- 
ployees in the same industry. The Carriage and Wagon Workers 
international Union claims that the carriage blacksmiths are special- 
ists and hence can gain nothing from affiliation with the union of 
blacksmiths. The cutting-die and cutter makers, who manufacture 
the dies used in cutting cloth, paper, leather, and other materials 
according to various patterns, declare that they have no interests in 
common with the blacksmiths and machinists, from whom their ranks 
are recruited. Special training is required to do this work, and as the 
waste of material makes the cost of teaching new hands very high, 
the cutting-die and cutter makers are only slightly affected by the 
demand for machinists and blacksmiths. 

When the members of a trade require no special traimng for the 
work in each of the industries in which they are employed, a com- 
promise seems necessary. Trade-union officials have suggested that 
the members of such a trade might belong both to the craf union 
and to one of several industrial unions. Power to declare strikes and 
to bargain with employers could be vested in the industrial unions. 
The craft union could limit the supply of workers m trade and pre- 
vent individual competition for employment between them, and if the 
scope of its activities were limited to these matters there need be no 
overlapping of functions between it and the industrial unions. 

The second question to be considered is whether the skilled and 
unskilled workers in an industry should be combined in the same 
organization. Undoubtedly the unskilled gain greatly from such an 
alliance. Organizations composed wholly of unskilled workers such 
as the International Brotherhood of Foundry Employees, the Inter- 
national Association of Glass House Employees, the International 
Hod Carriers' and Building Laborers' Union, and the Interna- 
tional Association of Blast Furnace Workers and Smelters, are 

practically impotent to improve the conditions of their members 
Smce their work requires little or no training, strikes are uTeS' 
r/aXv L T '7'r T' °^ -employed^ men and wlen ca„ 
Carrie'^s and RriH ,T "^'^ P'^"^" '^''^ International Hod 
• r ^, ^ ^"^ ^^''°''''' U"'°" ™^k^ no mention of strikes 

trik ITT"". '" '"'' '''' international organization pay no 
str ke benefits and rarely declares a strike. The local socE of 
bu.ld,ng laborers have derived the strength to maintain striteand bargain with employers from the aid which l^ey have 
secured from the skilled trades by affiliation with loca buildin! 
jades co„„e,.s. The Laborers' Union Protective SoSty of New 
J^ork CUy, composed of bricklayers' and masons' helpers has secured 

rhtofThJ n" V T^^""^"' ^°^ ''^ members J^tZgh 

„ • . , uenait and have secured the inrlnsinn ,^f 

provisions favorable to the hpln^rc ;„ .u • inclusion of 

contractors. '^ ' '" ^^'" ^g^^ements with the 

inif ■"T'u" °^ ^ "^'^ organization of unskilled workers in all 
ndustnes has been suggested by trade-union officials. The Laborer' 
nternafona Protective Union, with jurisdiction over al unskH d 
and general laborers, male and female, was formed severa vearT.ln 
but never attained any real importance. The constant idenf ^ ' 
gration into the United States makes any eLtive regit U 72 
supply of general laborers impracticable Moreover !fn,l 1 H ^ 
erscanbekent fn;thf„i .„ ,1, • , moreover, unskilled work- 
can oe Kept laithful to the union on y with great diffirnl.,, r... • 
unemployment, which is very freciuent amon" tl ~^^y- ^^""ng 
for failure to pay dues for ar.^a T,^! ' "''^ ^'^ ^''P^''^^ 
their labor at Us tt;%;:Vn rscl"o?:a if T^' " '7 ^"""^ 
one large organization of unskilled worl^rs „' ' J he^^^^^^^^^^^^ 

these workers, with their low wages and freauent ,Z , ^ 

maintain such benefits seems doubtful ^ ""employment, to 

The chief hope of the unskilled workers rests in »n ,ii- 

; mfa^s-uch" "^^''■■"^'^>="■" ""'^'"^ sSan rn rr;; 

contrary, such amalgamation entails a sacrifirp cin.. ., . ^ 

ynote ot the dommant unionism has been self-interest. The 



consistent pursuance of this policy by the American Federation of 
Labor and its constituent international unions has made them succeed 
where the Knights of Labor, with its altruistic ideals of brotherhood, 
failed. Following this policy, the skilled trades have refused to unite 

with the unskilled. 

There are aristocracies even among the aristocrats. Certain trades, 
whose members possess a higher degree of efficiency and training than 
do their fellow employees, have refrained from entangling alliances 
The exclusiveness of the locomotive engineers has undoubtedly helped 
to prevent the successful federation of all railway employees. The 
bricklayers have held aloof from local and national federations of 
the building trades. The marine engineers have refused to affiliate 
with the International Seamen's Union. Years ago the window-glass 
blowers and gatherers were reluctant to amalgamate with the less 
skilled window-glass cutters and flatteners. Today the situation is 
reversed The introduction of machinery has greatly reduced the 
skill of the blowers and gatherers, and the cutters and flatteners, who 
now possess the greater skill, have seceded from the amalgamation 
of window-glass workers to form an independent organization. The 
lasters were for some vears the aristocrats among the boot and shoe 
workers The introduction of machinery greatly reduced the skill of 
all boot and shoe workers except the lasters. About 1885 the lasters 
formed a strong union, while the other trades were unorganized 
or maintained weak, struggling unions. In consequence, the lasters 
gained at the expense of the members of other crafts, for the em- 
ployers fearing to provoke them to resistance, permitted their wages 
to remain the same when reducing those of the other trades and even 
secured reimbursement for increases in the wages of the lasters by 
imposing reductions on those of the other crafts. Similarly, the 
cotton mule spinners were able for many years to obtain high wages 
at the expense of the other unorganized groups of workers m the 

cotton industry. 

Introduction of machinery and further division of labor have forced 
many of these highly skilled trades from their position of aloofness. 
With the replacement of the mule by the ring frame, which can be 
manipulated by women and children, cotton mule spinning has be- 
come a vanishing craft. After 1890 the new lasting machinery greatly 
demoralized the lasters' unions. Certain processes could be done by 





boys, and one could pass fairly rapidly from the easy to the more 
difficult parts of the work. The lasters were, therefore, quite willing 
to join with the other trades in forming a single amalgamation of 
boot and shoe workers in 1895. 

This breaking down of the barriers between trades is bringing 
about for the most part, however, only the amalgamation of groups 
whose work requires some degree of skill. The unskilled, who are 
most helpless, remain largely without effective organization. Never- 
theless, as division of labor becomes more minute, as the old method 
of apprenticeship fails, and as the groups of skilled and semiskilled 
are being recruited in an increasing number of instances by the pro- 
motion of the common laborers required for the many odd jobs exist- 
ing in every industrial establishment, the other trades are manifesting 
a growing tendency to admit such potentially dangerous competitors 
to their unions. Thus the plumbers and the steam fitters, the boiler- 
makers, the tile-layers, the blacksmiths, the pressmen, and some other 
trades admit their helpers to membership in their unions, because, 
while these helpers are not apprentices, they have opportunity to 
learn the trade and often become efficient journeymen. The Amalga- 
mated Meat Cutters and Butcher Workmen of North America admits 
workers in the meat industry, irrespective of skill ; and in 1904 all 
classes of employees in the Chicago packing houses went on strike 
to raise the wages of the least skilled and most poorly paid, the 
reason being that labor has been so minutely subdivided in the pack- 
ing houses that the immigrant can be trained in a few months to even 
the most difficult of the processes. Some of those who are handling 
trucks and doing other odd jobs have been displaced from more 
skilled positions. They can slaughter and cut up the whole ox, hog, 
or sheep, and would be glad to regain their old positions at less 
wages than those now holding them are receiving. Moreover, the 
wages of all employees in the packing houses bear a fixed proportion 
to the amount paid to the least skilled. So the Amalgamated Meat 
Cutters and Butcher Workmen desires control over the general 
laborers, and declared the strike of 1904 in their favor to keep them 
satisfied with their present employment and indirectly to raise the 
wages of the more skilled employees. Instances in which the self- 
mterest of the skilled workers demand their amalgamation with the 


unskilled are still rare, however. If common laborers are admitted in 
the near future to unions of other workers in the same industry, they 
will be admitted not from self-interest but from more altruistic 
motives, from a growing spirit of class consciousness attended, perhaps, 
by a correspondingly growing realization of class responsibility. 

Theodore W. Glocker 

University of Tennessee 







' I ^RADE-UNIONISTS in all industrial countries have developed 
X a number of distinct forms of grouping. At the present time, 
for example, American trade-unionists are organized into local trade- 
unions, national trade-unions, city federations, a national federation, 
local trades councils, and national trades councils.- The same union- 
ist may be included in all of these six forms of grouping. A Balti- 
more printer, for example, may be a member of the local union of 
his trade— the Baltimore Typographical Union; of the national 
union of his trade— the International Typographical Union ; of the 
city federation — the Baltimore Federation of Labor; of a national 
federation— the American Federation of Labor ; of a local trades 
council— the Baltimore Allied Printing Trades Council ; and, finally, 
of a national trades council— the International Allied Printing Trades 
Association.^ Each of these forms of grouping might, therefore, 
embrace all the trade-unionists in the United States. As a matter of 
fact, some of them include in their membership only a small part of 
the total number of trade-unionists. The number of members of all 
the local trades councils in the United States, for example, is probably 
less than one fourth of the total number of trade-unionists. 

iprom the Quarterly Journal of Economics, Vol. XXVII (1913), pp 455-481 

2 There are other forms of grouping, as, for example, state federations and 
state and district unions of the local unions in particular trades, but these have 
played a relatively small part in the organization of labor in the United States 
and are, therefore, omitted from the present discussion. 

3 The terminology of American trade-union structure is much confused The 
city federation, as it is called here (that is, the federation of the local unions in 
a city), is known by various other names; for example, "labor assembly" 
'trades' union," "trades council," and "central labor union." In the constitu- 
t!on of the American Federation of Labor city federations are denominated 

central trade and labor unions" or, more briefly, "central bodies" The local 
trades councils, as they are called here (that is, the local unions of allied trades 
in a particular aty), are also frequently referred to as "central bodies." 


The forms of trade-union grouping have steadily increased in 
number. The local trade-union dates its origin from the beginning 
of the nineteenth century; the city federation from 1827; the 
national trade-union, as an effective form of organization, from 1850. 
Trades councils, local and national, are a development of the last 

twenty-five years. 

The interrelations of these forms of grouping— the elements in 
American labor organization— have been determined slowly, and 
from time to time the changing needs of the trade-union movement 
have necessitated readjustments of these relations. As might be ex- 
pected from the political analogy, the relationship which has proved 
most practicable has been the dominance of some one of the forms of 
grouping over the others. Whenever the tide of trade-unionism has 
risen markedly, the desire to give unity to the labor movement has 
led to the assumption of leadership and control by one or another of 
the forms of grouping. In the history of American labor organization 
four distinct structural forms are distinguishable, each of which 
emerges in a time of rapid growth in the trade-union movement. The 
periods in the development of the structure of American labor or- 
ganization may accordingly be roughly defined as extending from 
1800 to 1815, from 1827 to 1838, from 1879 to 1888, and from 1897 
to the present. In the years between these periods the labor move- 
ment was relatively weak, and the relations of the various forms of 
grouping were less sharply defined. 

In the earliest. period— from the end of the eighteenth century to 
about 181 5— the local union was the only form of trade-union 
grouping. Among the local unions of different trades in the same city 
therejwas no substantial connection ; communication between the 
local unions of the same trade in different cities was rare, and 
cooperation among them slight. 

The second period, extending from 1827 to 1838, was marked by 
the rise of the city federation, or, as it was ihen_called,, the trades' 
union. The admirable study of this period by Professor Commons 
and Miss Sumner shows that the labor movement of the period was 
largely directed and controlled by the city federations.^ Attempts 
to form national trade-unions were made, but failed. The city 
federations united to form a national federation,— the National 
1 Documentary History of American Industrial Society, Vols. V, VL 



Trades' Union,--but this exercised practically no power and its 
life was short. 

A characteristic feature of American trade-unionism from 1865 
to 1888 was the formation of a number of national federations in 
which the controlling elements were the city federation and, to a less 
extent, the local union. The International Industrial Assembly of 
North America, organized in 1864, the National Labor Union, active 
from 1866 to 1870, the Industrial Congress, organized in 1873, and 
the Knights of Labor, organized as a national federation in 1878, 
were alike in this respect. These national federations were designed 
to exercise functions distinct from those exercised by the national 
and local unions, but the evident desirability of bringing the entire 
labor movement into unity led in the latest and strongest of these 
organizations, the Knights of Labor, to the gradual development of 
the idea that the national federation should be dominant in the 
structure of labor organization. The opposition of the national trade- 
unions to a structural form in which the national union became sub- 
ordinate to the national federation led to the bitter struggle between 
the Knights and the national unions which characterized the years 
from 1885 to 1888. 

The fourth period in the structural history of American trade- 
umomsm— from 1897 to the present— has been distinguished by 
the increasing control exercised by the national trade-union over the 
other forms of grouping. This development, which forms the subject 
of the present paper, will be treated with reference to (i) local 
unions, (2) national federations, (3) city federations, (4) local and 
national allied-trades councils. 


The present dominance of the national union in American labor 
organization is based upon the steadily increasing control exercised 
by the national unions over the local unions. This development 
presents two aspects. In the first place, the degree of control which 
the national union exercises over its affiliated local unions is impor- 
tant, since both the power and the desire of the national union to 
control the other forms of labor organization are directly proportional 
thereto. Secondly, the extent to which local unions are affiliated with 
some national union is also important, since if a large part of the 



local unions were independent, the power of the national union to 
control the other forms of labor organization would be much less 

than it is. 

In both respects the control of the national unions over the local 
unions has increased rapidly in recent years. The^ increase in the 
_^gree of control over the affiliated local unions— ordinarily described 
-^ 6SitSSatie!i--iias been due to a variety of causes, chief among 
wliich are the establishment of nationally administered^ beneficiary 
features, the financing of strikes by the national unions, and the 
negotiation of national agreements with employers. These extensions 
of activity on the part of the national union have necessitated an 
increasingly stricter control by the national union over its affiliated 
local unions, which has exhibited itself in many ways, such, for 
example, as the national regulation of admission requirements, the 
national control of strikes, and the adoption of national working rules.^ 
The extension of control by the national union over a larger and 
larger number of the local^ unions in its trade or industry is closely 
"connecTeTwith the gFowth in centralization. The same considerations 
which lead affiliated local unions to transfer a large part of their 
activities to a national organization are influential in leading un- 
affiliated unions to ally themselves with the national union in their 
trade. The advantages to be obtained, however, have not been the 
only force making for the affiliation of the independent unions. The 
national unions have exerted pressure on the unaffiliated unions by 
discriminating against their members who seek work in other cities 
and, wherever practicable, by establishing rival local unions. More- 
over, as will be shown below, the national unions have used their 
increasing control of the city federation and the local trades council 
to force the independent unions to affiliate. 

The result has been that American local trade-unions are con- 
nected with some national union probably mo re generally t han the 

1 Various aspects of this development have been described in detail by several 
writers See Adams and Sumner, Labor Problems, pp. 228-230; Carlton, History 
and Problems of Organized Labor, pp. QS-no; McCabe, The Standard Rate in 
American Trade Unions, pp. 120-178; Wolfe, Admission to American Trade 
Unions, pp. 11-33; Spedden, The Trade Union Label, pp. 32-51; Sakolski, The 
Finances of American Trade Unions, pp. 12-20, 46; Kennedy, Benefiaary 
Features of American Trade Unions, pp. 106-120; Glocker, The Government 
of American Trade Unions, chaps, v, vi; Barnett, The Printers, pp. 29-40. 


local unions in any other country. It is one of the curious phenomena 
of trade-unionism that although local and sectional trade-unions still 
survive in England, they have almost entirely disappeared in the 
United States, despite the enormously greater area covered. In the 
United Kingdom, for example, the following unions of compositors 
were in existence in 1910 : London Compositors, Dublin Typographi- 
cal Society, Typographical Association, Scottish Typographical Asso- 
ciation.^ In the United States in the same year there was no important 
independent local union of compositors or sectional association of 
such unions. All the local unions were affiliated with the Interna- 
tional Typographical Union. Essentially the same contrast is found 
ir a number of other trades.^ 



As long as the national unions had slight control over their affiliated 
local unions they did not seriously object to the formation of national 
federations in which city federations and local unions were the 
dominant elements. With the growth of the power of the national 
union over the local unions, the national unions in which centrali- 
zation was greatest became strongly dissatisfied with such national 
federations, particularly if they encroached upon the functions of 
the national union.^ 

The question did not become acute, however, until the great in- 
crease in the strength of the Knights of Labor, and the transformation 
in the attitude of that organization toward the national unions. In 
1886 the national trade-unions, desirous of defending themselves 
against the threatened domination of the Knights, took over and 
reorganized the Federation of Organized Trades and Labor Unions 

1 Labour Department Report on Trade Unions in 1908-1910, p. 50. 

2 No data are available as to the number of independent local unions in the 
United States as a whole, but some indication of the number may be obtained 
from the annual reports made to the Massachusetts Bureau of Statistics by 
labor organizations in that state. In iqio, according; to information kindly 
furnished by the Director of the Bureau, of some 1250 local unions in Massa- 
chusetts all except twenty were affiliated with some national union or with the 
American Federation of Labor. See also the Bureau's Fourth Annual Report 
on Labor Organizations, 191 1, p. 76. 

•^For an account of the attitude of the stronger national unions towards the 
national federations from 1865-1885 see Kirk, National Labor Federations in 
the United States, pp. 17-26. 



of the United States and Canada, a national federation which had 
been organized in 1881. According to the original ^^ff ^^^^^^^^^ 
Federation the national unions were allowed one delegate if their 
membership was less than 400, two delegates if 4000, three if 8000, 
Lr if 16,000, five if 32,000, and so on. Each local trades assemHy 
or city federation was allowed a single delegate irrespective of the 
number of its members. In 1882 the plan of representation was 
slicrhtly altered. Assemblies of the Knights of Labor and local trade- 
unions were given the same representation as city federations, and 
state and provincial federations were allowed two delegates. In sev- 
eral of the sessions of the Federation prior to 1886 the voting strength 
of city federations and local unions was greater than that of the 

national unions.^ . 

^ In 1886, when the Federation assumed its present title -the Amer- 
ican Federation of Labor-the basis of representation was altered so 
as to exclude from representation all local unions of trades m which 
national unions exPsled- This change did not entirely satis y the 
national unions, since it was possible that a large number of loca 
unions in those trades in which there were no national unions might 
be affiliated directly with the Federation.^ Moreover the representa- 
tives of city federations might easily have become sufficiently numer- 
ous to outvote the delegates of the national unions. A year later, 
in 1887, the national unions, therefore, made their control of he 
Federation unassailable by the adoption of the provision that if a 
roll call was demanded* each delegate, except those of city or state 
federations, might cast one vote for every one hundred members 

nn 1883, for instance, fifteen of the twenty-seven delegates were representa- 
tives of tol trade-unions, city federations, and state .federations 

2 National unions were given tlie same representation as before, and eactt 
1 1 .rdktrict trade! organization or federated body not connected wih, or 
havln/a N^Jti ofl^t^rnational head affiliated with, this Federation" was 

*"°T'dek:at:'f?:m the Internationa, Typographical Union to. the se.ion of 
the Federation held in 1886 suggested in his report to his "mon that local 
the f™""'"" ^^ ^ouid be so strongly represented as to out- 

S r Ttle dXacc Ued delegates from distinctive "f ional and in er- 
natTonal bodies" (Proceedings of the Internauonal Typographical Union, 1887, 

"• Mn',8S8 it was provided that a roll call might be demanded by one fifth of 
the delegates a^d in XS8P the present rule that a roll caU may be demanded by 
one tenth of the delegates was adopted. 





which he represented.^ The representatives of city and state feder- 
ations were allowed, as before, only one vote. The delegates of local 
unions directly affiliated with the Federation may cast one vote for 
each hundred members, but the total membership of these unions is 
small compared with that of the national unions, and on account 01 
the expense many of them are unable to send delegates. 

By these changes the national unions were given an overwhelmingly 
large votmg power in the Federation. The convention of 191 1 will 
furnish an illustration. The total number of delegates present was 
349. Of these, 228 were delegates of national unions, 25 of state 
federations, 67 of central federations, 21 of trade and federal labor 
unions directly affiliated, and 6 of fraternal organizations. The num- 
ber of delegates of national unions was nearly two thirds of the total 
number, and the voting strength on roll call of the national unions 
was 17,104 of a total vote of 17,240. Moreover, it has become cus- 
tomary for the national unions to send as part, at least, of their 
delegation important officials of the national union. The sessions of 
the federation are thus to a very considerable extent councils of the 

executives of the national unions. ""~" ' " 

Throughout the whole period since 1886 the national unions have 
been more and more firmly resolved that the trade-union movement 
should not be transformed into that semipolitical form which has 
always characterized it when the city federation and local union have 
had control of the national federation. On several occasions repre- 
sentatives of the city federations have complained at the sessions of 
the Federation that their voting strength is too small. In 1900 for 
instance, a resolution providing that each delegate from a national 
union should be allowed only a single vote on roll call was introduced 
but was voted down without discussion.^^ It was proposed in 1900 that 
the delegates from city federations should be permitted to cast the 

of i88,*^h/ n""'^ '^ *^' "^t-^"''' ^'■^"^ '^' Typographical Union to the session 
of 1887 the purpose in making this change was stated as follows- "The bas^s 

central labor unions and state assemblies a vote out of proportion to thHr 
coS^fThe ^"^.^^^^1!;^-;"- bodies to exert an undrintence V th^^^ 
no dolt 'tfr '^l ^''^T'"''- ^"' '^^ '^'^ ^^'^ ^h- constitution vvould 
only This can bTdolTfn' " '? ''"^^* "^^^^"^' ^"^ international bodie 

of th. T ; ! , i "" ^^ ^^^ "^"^'^ '^^^''^"' '^ desirable " (Proceedings 

of the International Typographical Union, 1888, p. 1:^7) ^^^oceedmgs 

^Proceedmgs of the American Federation of Labor, 1900, pp. 40, 155. 



votes of local unions directly affiliated with the Federation and con- 
nected with the city federation, but this proposal also was defeated.^ 
In 1902 an interesting attempt was made to organize a new na- 
tional federation. The Milwaukee city federation issued a circular 
letter calling a national convention to be composed of the representa- 
tives of city federations. The executive council of the American 
Federation of Labor immediately, to quote their account, "used our 
crood offices to persuade the central labor unions and other central 

bodies from pursuing this mistaken course " The plan was not 

abandoned, however, and at the session of the Federation in 1902 
Mr Victor Berger, the delegate from the Milwaukee city federation, 
introduced a resolution providing for a convention of delegates from 
city federations in cities of over 50,000 inhabitants "to consider the 
conditions and evils peculiar to the large cities and dangerous and 
oppressive to the laboring people living therein." Despite Mr. Berger's 
assurance that the Milwaukee city federation "had no design to 
organize a body antagonistic to the A. F. of L.," a committee of 
the Federation reported unfavorably on the project on the ground 
that there were " already adequate means to promote such propaganda 
through the various local, central, and state bodies." ^ The proposed 
federation would have been practically identical in its composition 
with the long line of national federations which began with the 
National Trades' Union of 1834 and ended with the Knights of Labor. 
The number of national unions affiliated with the American Fed- 
eration of Labor Ms increased steadily since 1897. In 19 11 the only 
important national unions not in affiliation with the Federation were 
the Locomotive Engineers, the Locomotive Firemen and Engmemen, 
the Railroad Trainmen, the Railway Conductors, the Flint Glass 
Workers, and the Bricklayers and Masons. The total membership 
of the nonaffiliated unions in 191 1, at a liberal estimate, did not 
exceed 600,000, while the membership of the affiliated unions was 
approximately 1,800,000. 

No rival national federation has been able in this period to offer 
effective competition. The Knights of Labor has been practically an 
extinct organization. The American Labor Union, organized in 1902 
to promote industrial unionism, went out of existence in 1905. The 

1 Proceedings of the American Federation of Labor, 1900, p. iS5- 
2/rf, 1902, pp. 49, no, 205. 



Industrial Workers of the World, organized in 1905 as the successor 
of the American Labor Union, lost in 1907 the support of its only 
important national union, the Western Federation of Miners, which 
affiliated in 19 11 with the American Federation of Labor. The mem- 
bership of the Industrial Workers of the World — in 191 1 about 
10,000 — is relatively insignificant. 


The control of the American Federation of Labor by the national 
unions has not only been important in itself, but through the Fed- 
eration the national unions have acquired such control as they now 
have over the city federations. In every time of labor unrest since 
1827 city federations— known variously as trades' unions, working- 
men's assemblies, district assemblies, or central bodies— have come 
into existence in the chief industrial centers. In the earlier periods 
of American trade-union history these organizations called sympa- 
thetic strikes, declared boycotts, and sustained strikers with financial 
aid. To many of their activities the national unions had no objection, 
but at other points conflict occurred. With the increasing centraliza- 
tion of the national unions it became intolerable that their policies 
should be interfered with by local federations. 

The control exercised by the Federation of Labor over city feder- 
ations is based on the preference shown by local unions for city 
federations affiliated with the Federation as against independent city 
federations, since the Federation can obviously not impose rules on 
unaffiliated organizations. In 191 1 there were 631 city federations 
affiliated with the American Federation of Labor. The number of 
independent city federations is at present very small.^ There have 
been, however, even within recent years important independent city 
federations, and some of these were in cities in which there were 
also city federations affiliated with the Federation. 

The Federation has been able to attach to itself so . nianyjcity 
federations largely through the steady pressure of the national unions 
on their local unions. In 1893, by a provision in the constitution of 
the American Federation of Labor, it was made ''the duty" of all 

1 The secretary of the American Federation of Labor, Mr. Morrison, informs 
the writer that in November, igi2, in only two cities of considerable popula- 
tion were there independent city federations. 



»' f ^ incf nirt " their local unions to join the 

K:c."^^»rs:;ir .;"-'. .:. ,l. »*. ., 

the Federation.^^ ^ . „^ .„ affiliated city federation have 

r r "ndX .0 'persuade .e offices ^^^- -^ffiS 

to bring pressure ^^ ^^^ ^.^^^^^^^^'^'^ ^'^ '''^'- 
federation. In 1907 the delegate trom t > resolution 

rJ'tedlT t:ZT^BoX'to\ny federations, 
rrjTcorerrnlber oMocal unlo.^^^^^^^^^^^^ - 
tional unions affiliated with the Federat on ^^^^ ^"'^JJ^^j^^ ;„. 

rTeration. The convention, however, merely reiterated its mstruc 

.Proceedings of the Amen- Fede-^^^^^^ of ^^^^^^J^^r^ _,„,„„, 

nn iqoi a commiUec °V ■ .r,«ilWte said "Your committee reports 
which aimed at forcing local umons U> affl^. sa^d, ^^^^^^^^ ^^^^ ^^ 

adversely, for the reason ^a tte J^™"^^ (Proceedings, 1901, p. .98). 

'ntLXfoTltmeTS FedttTon of Labor, x,o,, pp. .0, .3. 

*Id. i909> P- 279. 



the city federation has no power to retain local unions, its conduct 
must commend itself to the local unions or they will leave, and the 
seceding unions may, if they see fit, form a rival city federation. 
No more effectual check on the exercise by city federations of any 
real power over the constituent unions could well have been devised. 

I Although the city federation has not yet been brought sufficiently 
under the control of the national unions acting through the Federation 
to make it appear desirable to the national unions that local unions 
should be forced to affiliate, a beginning in such control has been 
made. The first and most important step in this direction was to 
limit the power of the city federations to admit local unions. Under 
the constitution of the American Federation of Labor, until 1886, a 
city federation might admit local unions at its own discretion. The 
constitution of 1886 provided that city federations were not to admit 
delegates "from any local organization that is hostile to the objects 
of this Federation or that has been suspended or expelled by a 
National or International organization of their trade." The rule was 
amended at various times, chiefly in order to make its provisions more 
exphcit,^ but since 1897 it has been substantially in its present form.- 
As it now stands it reads as follows : 

No Central Labor Union, or any other central body of delegates 
shall admit to or retain in their councils delegates from any local or- 
ganization that owes its allegiance to any other body. National or 
International, hostile to any affiliated organization, or that has been 
suspended or expelled by, or not connected with, a National or 
International organization of their trade herein affiliated under 
penalty of having their charter revoked for violation of their charter 
subject to appeal to the next Convention.^ ' 

The rule has been invoked in two classes of cases. In the first 
place, city federations have been required to exclude local unions 
which have been suspended by, or have seceded from, or are merely 

iProm 18S8 to I8Q3 the rule required city federations to exclude local unions 
of national unions not affiliated with the Federation, but since 1803 city federa- 

unTons u^Vh''" PTl"'^'' '^"*' '^' ^"^^^ ""^^"^ «^ unaffiliated national 
unons which are not hostile to national unions affiliated with the Federation 

Until IQ02 a oty federation which disobeyed the rule was deprived of 
representation. Since then the charter has been withdrawn (Proceed ngs o 
the American Federation of Labor, 1902, p 216) roceeamgs ol 

Sectiorf''"'"'" '^ '^' "^""'""^^ Federation of Labor, 1912, Article XI, 



not attached to, the national union of their trade if the national j 
union is affiliated with the Federation. In 1891 for instance, the 
San Francisco Trades and Labor Assembly, a c.ty federation, wa 
suspended from further representation in the Federation because 1 
refused to exclude a local union which had been suspended by he 
Brewery Workers.' The Federation has consistently required the 
city federations to maintain the principle that every local unu,n 
should, if possible, be connected with a national >>";7; /^^^ "^^ 
federations, governed largely by local considerations, if left to them- 
selves would frequently have offered aid and comfort to seceding and 
independent unions, and to that extent have contributed to the 
support of local as against national unionism. , 

In the second place, city federations have been required to exclude 
local unions affiliated with a national union which is not connected 
with the Federation and which aims to include m its membership 
classes of workmen which are recognized by the Federation as prop- 
erly belonging to a national union so affiliated. In violation of the 
rule city federations have not infrequently admitted such local unions 
and refused to unseat their delegates when ordered to do so. From 
time to time charters of city federations have been revoked in par- 
ticularly offensive cases and new federations formed from the loca 
unions. There has been increasing strictness in the enforcenient of 
the rule In 1908 a large number of city federations admitted the 
local unions of a national union of electrical w^orkers although 
another national union in the same trade was affiliated with the 
Federation. Other city federations admitted local unions of the Flmt 
Glass Workers, who at that time were engaged in a bitter junsdic^ 
tional dispute with the Glass Bottle Blowers, a union affiliated with 
the American Federation of Labor. These city federations persisted 
in their course after notice and were deprived of their charters by the 
executive council of the Federation. On appeal to the convention 

the council was sustained. . • , .u * ^„i„ 

The national unions regard it as a well-settled principle that only 
one national union may have jurisdiction over a particular class of 
workmen. They have found that the support of city federations has 
been one of the chief factors in promoting and encouraging the forma- 
tion of rival national unions, and they have become more and more 
I Proceedings of the American Federation of Labor, 1890, p. 39. 

f I 
) f 



determined that the city federation shall not lend its aid to such 

The right of a city federation to exclude a local union of a national 
union affiliated with the Federation has also been restricted. As early 
as 1897 the executive council of the Federation decided that it was 
improper for a city federation to expel a local union merely because 
its national union was involved in a controversy with another na- 
tional union.^ In 1901 the Chicago Federation of Labor was ordered 
to readmit the delegates of an expelled local union.- These decisions 
were not based on any specific clause in the constitution, but in 1902 
a section was added which provided that a city federation might not 
reject the credentials of the delegates from a local union of a na- 
tional union affiliated with the American Federation except on charges 
duly proved. The delegate or local union concerned was given a 
right of appeal to the executive council of the Federation.^ This 
right has been freely used, and in 1908, when certain city federations, 
on account of a jurisdictional dispute between the Plumbers and 
the Steam Fitters, refused to admit delegates from Steam Fitters' 
local unions, the convention of the Federation ordered the executive 
council to issue a general order to all city federations that they must 
admit the delegates of local unions of Steam Fitters.'* 

The national unions have not been content merely to secure that 
their interests are safeguarded in the composition of the city feder- 
ation. They have also gradually evolved a code of rules to be fol- 
lowed by the city federations in the conduct of their affairs. These 
rules relate to the boycott, to assessments for strikes, and to interfer- 
ence in collective bargaining — fundamentally important activities of 
the city federation."^ 

The initiation and support of boycotts has always beeii^one of the 
chief functions of the city federation. Comprising representatIves~of 
unions of all trades, the power of the city federation as a boycot- 
ting instrument has been very great. Desirous of turning this power 
to their service, the national unions have yet found difficulty in 

1 Proceedings of the American Federation of Labor, 1897, P- 35- 

-Id. 1901, p. 158. 

3/rf. 1902, p. 215; 1904, p. 243. 

*ld. 1908, p. 192. 

«See Burke, History and Functions of Central Labor Unions, p. 80. 



trnllin. it since city federations have not infrequently initiated 
controlling It, since ciiy ^^^^ ^^^.^^^^ ^^^^^^ 

boycotts which r ^;^;^!^^^^^^^ in the constitution of the Amer- 
^^S::^^^^ city federations to orginate boy 
c:us?nd requiring them before ^^^^^^^^^ 
unions to investigate the matter and ^^ ;^^ct /.^ ^^'^^^^ ^^,^ ^^.^ed, 

settlement.^ On several occasions ^^^^l^^^^^^^^^ 

on complaint of national unions to c«^ J^^^^^ ^^ 

recommended that only boycotts on firms domg an mterstate busi 
Lrshould be submitted to tbe na^iona ~ ^^^^^^^^^ 

'thetsrssmer o^ S ^Sns by city federations for the support 
of Itr Sas been the occasion of frequent complaint by the national 
fl^ The stronger national unions finance their, own strikes, and 
Tv sJngy obS to having their members required to supper 
tlSnii loLl unions -.e-^ unions are u„^ . | 

'"T'n occasions wh n Lai interests are much involved, some 

" hn,nd be kft to city federations to raise funds. At the session 

'f Th te tan F^ aUo" of Labor in 1904 Mr. Mac.rthur, a dele- 


i^r Cc^nX ^s^tS ;: forbid all assessments, but 

, Proceedings of the American ^^^"^'^uVoTl' IT "' '''" 
^Id. 1903) P- 182. 





did advise tlie city federations that assessments should only be levied 
after the question had been submitted to the membership of the 
affiliated unions.' 

Finally, the national unions have strongly resented the uninvited 
interference of city federations in the negotiations between local 
unions and employers. National unions are not infrequently glad 
to avail themselves of the aid of the city federation in dealing with 
employers but the stronger national unions object to any attempt on 
the part of the city federations to take the lead in such matters. In 
1898 a section was added to the constitution of the Federation which 
provided that a city federation should not have authority to order a 
strike of any local union without the consent of the national union = 
In 1906 an additional section provided that a city federation must 
take no part in "the adjustment of wage contracts, wage disputes or 
working rules of local unions affiliated with a National or Interna- 
tional union " unless the rules of the national union permit or unless 
consent is given by the officials of the national union ' 

h}'Z "!f r°'T^^ f"'"'^ " "'"' ^' '''" '^^' the city federation 
has been definitely subordinated to the national union. From the 
standpoint of the stronger national unions the city federations are 
merely the means of making more effective the boycott, of cariyinE 
on the propaganda for the union label, and of taking such polifical 
action as the needs of the labor movement may require The les 
centralized national unions would be willing to make the city iedZ 
ations more important. Particularly is this true of many of the 
unions in the building trades. There is, therefore, occasionally some 
division of opinion among the national unions in the Federation Til 
the proper functions of the city federations, but every increase n 
the centralization of the national union has contributldTrsen " 
ment m favor of the subordination of the city federation 




tra^' L"o?re!r "• °^=^^"''^^':°"' '^e federation of unions of allied 
trades, is of recent origin. Local councils were formed in the~binidi^e 
trades as early as 1865 and in the printing trades in 1886 Coundls 



have also been formed in the metal trades, among the railroad unions, 
and among the maritime trades.' It will be sufficient for our present 
purpose to describe the development which has taken place in the 
relation of the national unions of the building trades to the local and 
national building trades councils, since in these trades the activities 
of the councils have been preeminently of such a kind as to cause the 
national unions concern. 

The local building trades councils have been an important factor 
in industrial disputes. They have systematically employed the sym- 
pathetic strike and have ordinarily maintained jointly the closed 
shop. For many years their activities were unsupervised by any 
national authority. In 1897 a considerable number of local building 
trades councils formed a national organization known as the Inter- 
national Building Trades Council. In 1903 it comprised seven national 
unions and seventy-six building trades councils. The affiliated na- 
tional unions were, for the most part, small unions, since the larger 
unions were from the outset strongly opposed to the International 
Building Trades Council. In the annual convention of that body 
each local council originally was entitled to one vote for each trade 
in the council. A single local council might, therefore, cast ten 
or fifteen votes, but a national union was allowed only a single 
vote. In 1904 and 1905 changes were made in the constitution 
with a view to giving the national unions greater weight in the 
conventions, but the national unions were far from satisfied. In 
1903 a few of the larger national unions in the building trade§,.x>r- 
ganized the Structural Building Trades Alliance. The convention of 
the Alliance was composed exclusively of delegates from national 
unions. The organization of the Alliance greatly weakened the Inter- 
national Council, and for some years the latter has been unimportant. 
The Structural Building Trades Alliance was transformed in ^908 
into the Building Trades Department of^ the America n Federation of 


The annual convention of the Building Trades Department, the 
final authority in its system of government, is composed of delegates 
fromlEeliffiliated national unions. Attempts have been made from 
time to time to secure the admission of delegates from the local 
councils, but these attempts have always failed. In 1909 delegates 
1 Kirk, National Labor Federations in the United States, pp. 80-88. 




from certain councils were allowed the privilege of participating in 
the discussion but not the right to vote. In 1910 the convention re- 
fused to admit delegates from local councils/ 

The Building Trades Department has not been very successful 
as yet in bringing the local councils under control, but a brief survey 
of its efforts will indicate the points at which the national unions de- 
sire to curb the activities of the local councils. 

The national unions have been particularly desirous of putting 
an end to the encouragement given to demarcation disputes by the 
councils. Until the formation of the Department a council waT 
entirely at liberty to recognize the claim of either of two contending 
unions to a particular class of work. They might, for instance, expel 
the local union of Stone Cutters on complaint of the Granite Cutters 
and thus lend their aid to a particular adjudication of the question 
of jurisdiction. WTien one considers that there are over two hundred 
building trades councils in the United States, and that their decisions 
are given in view of local conditions and not infrequently are the 
result of coalitions among the various local unions which have juris- 
dictional disputes, the resulting confusion can be readily conceived. 

From the time of its organization the Department has endeavored 
to establish the principle that a local council has no power to de- 
cide a demarcation dispute. In 1909 the executive council of the 
Department in its report to the convention said : 

Your Executive Council has taken the position that jurisdiction 
lines are laid down by International organizations, and as such they 
can only be altered, amended, or waived by duly accredited repre- 
sentatives appointed by each International union acting in a general 
way, and thereafter such amendments, changes, or conditions must 
be ratified by the Executive Committees of the Internationals in 

At the session of the Department in 1908, when the old controversy 
of the Plumbers and the Steam Fitters came up, Mr. Duffy, secretary 
of the United Brotherhood of Carpenters and Joiners and a delegate 
from that union to the convention of the Department, said : 

I believe every organization represented here has had men involved 
in strikes with Plumbers on one side and Steam Fitters on the other. 
Now we are coming down flat-footed to tell you that the Central 

'Proceedings of the Building Trades Department, 1910, p. 96. 
^Id. 1909, p. 36. 




Bodies and the local unions affiliated with them must not take any 
part in the future in these fights that may arise over jurisdiction. 
... We not only say must, but you are ordered by this convention 
to come together.^ 

On numerous occasions the executive council of the Department 
has forced local councils to readmit local unions of affiliated national 
unions which had been expelled on account of demarcation disputes.-^ 
Before the establishment of the Department local councils fre- 
quently admitted to membership local unions which were independent 
of any national union and local unions affiliated with national unions 
which were rivals of recognized national unions. Countenance and 
encouragement were thus given to the formation of independent and 
"dual" organizations. In the building trades, because of the local 
character of the industry, such independent and ^^dual" unions have 
been easily formed and in some cases have flourished for many years. 
The executive council of the Department decided in 1908 that local 
councils might admit to membership local unions of national unions 
not affiliated with the Department, but only if the " claims of juris- 
diction in no way conflicted with the locals of any affiliated union," 
and this decision was affirmed by the convention.^ In 1909 the 
Newark Building Trades Council was forced to unseat the delegates 
of "dual" unions of Tile Layers and Hod Carriers. In the same 
year the president of the Department reported that the number of 
independent unions of Hod Carriers was so large that the national 
union should be reorganized under the auspices of the Department, 
and this was finally accomplished in 1910.* A year later local coun- 
cils were ordered to unseat delegates of the "dual" local unions of 

Electrical Workers.^ 

The national unions in the building trades have not attempted to 
bring the local councils under control to any considerable extent ex- 
cept^'with reference to the admission and exclusion of local unions. 
It was provided in 1899 that local unions when making a demand 
for an increase of wages or a reduction of hours must secure the 
approval of their national unions as well as of the council. But the 
constitution of the Department from the outset has set forth that 

1 Proceedings of the Building Trades Department, 1908, p. 68. 

^Ibid. pp. 9, 16. ^Id. 1909, pp. 65-70; 1910, pp. 30-32. 

a Id. 1908, p. 35; 1909, P- 124. ^'id. 1910, p. 90. 







no local union affiliated with a council may strike without the consent 
of the council. Moreover, not only have the national unions been 
content to permit the local councils to order sympathetic strikes, but 
in order to facilitate such strikes provision has been made since 1909 
in the constitution of the Department that local unions must not 
enter into agreements which will prevent their "giving each other 
prompt and effective assistance or their combining for united action 
and material support." ^ Where councils have ordered local unions 
to strike and expelled them for failure to do so, the Department has 
refused to require their reinstatement." The willingness of the na- 
tional unions in the building trades to allow local councils to order 
out the members of local unions on strike is explicable by the fact 
that the trade-unions in the building trades are far less centralized 
than in most other trades. 

The Department has not been able as yet to enforce effectively 
even those of its rules relating to jurisdictional disputes and inde- 
pendent unions. The control of the councils by the Department is 
accomplished, to the extent that it is accomplished, by pressure on 
the local unions exerted through the national unions with which they 
are affiliated. If a local council refuses to obey the rules of the 
Department and its charter is revoked, a part or all of the local unions 
may form an independent council. The national unions cannot be 
uniformly depended upon in such cases to prevent their local unions 
from joining such independent councils. The officers of the Depart- 
ment have proceeded with great caution in enforcing the rules in 
order to avoid, as far as possible, the formation of "dual" councils. 
In his report to the convention of the Building Trades Department 
in 1911 President Short said: 

In the case of local councils who saw fit to disobey the mandates'^ 
of the St. Louis Convention, they were refused any further recogni- 
tion by the Department in so far as information or the obtaining 
of supplies etc. was concerned, and charters in various centers 
would have been revoked had it not been for the fact that it would 

^Proceedings of the Building Trades Department, 1909, p. 64. 

^Ibid. p. 38. 

3 The "mandates" here referred to were the decisions by the convention 
of 191 1 that local councils should expel the delegates of local unions of 
Carpenters and Steam Fitters, since these national unions had refused to accept 
the rulings of the Department with reference to their jurisdictional claims. 



have worked serious injury to innocent parties, by that I mean or- 
ganizations who were loyal to the Department. It would have been 
necessary, had charters been revoked, to immediately proceed to 
organize new councils, with the absolute certainty that some of the 
organizations would have continued in the old council, thus dividing 
the strength of the Building Mechanics in such centers as new councils 
were instituted ; as witnessed in the case of the St. Louis Building 
Trades, where we have organized a new council under the laws ot 
the Department and there still remains a portion of the old council 
who refuse to obey the laws of the Department.' 

Obviously the control exercised by the Department over the local 
councils can never be effective until the national unions are willing 
and able to force their local unions to refrain from opposing the 
councils established by the Department. This result is not likely to 
be accomplished in the near future. In the first place, the national 
unions in the building trades have relatively decentralized govern- 
ments and correspondingly small power over their local unions. 
Secondly, the national unions are not infrequently reluctant to abide 
by particular rules of the Department, although they favor the 
exercise of power in that field by the Department. 

In the period since 1897, then, the national union has retained and 
made more secure its control of the national federation; it has 
limited in important respects the powers of the city federations; 
and finally, it has taken the first tentative steps in the control of 
the allied-trades councils. In no other period of American trade- 
union history has the dominance of one of the forms of trade-union 
grouping been so clearly the ruling principle in the structure of Amer- 
ican labor organization. The complete subordination of the city 
federations and of the allied-trades councils is probable, since the 
increasing centralization of the larger and more powerful national 
unions leads them more and more to oppose any interference by 

local organizations. 

George E. Barnett 

Johns Hopkins University 



h I 


1 Proceedings of the Building Trades Department, 1911, P- 36. 




EMPLOYERS' associations in the United States formed for the 
purpose of dealing with or opposing organized bodies of work- 
men are of comparatively recent origin, but in the last fifteen years 
they have become a factor in industrial relations which is not to be 
ignored. Each December the Stove Founders' National Defense 
Association and the Iron Molders' Union hold a conference at which 
are determined wages and conditions of employment in the stove 
foundries for the succeeding year; the glass manufacturers meet 
representatives of the several glassworkers' unions annually; the 
coal operators in the Southern and Southwestern coal fields have a 
series of written agreements with the United Mine Workers of 
America. In these and several other industries which might be men- 
tioned the system of collective bargaining developed between the 
manufacturers and their men has resulted in the maintenance of a 
permanent industrial peace. 

j On the other hand, a number of organizations of employers exist 
almost exclusively for the purpose of resisting collective bargaining 
and recognition of the unions, on the theory that where the complete 
autocracy of the employer is preserved the interests of all are better 
cared for than under any scheme of industrial democracy yet devised. 
Nor has this conclusion been reached by purely deductive reasoning 
on the part of those who take this position. One of the most signifi- 
cant features of their program is that it is based upon a wealth of 
experknce, for of the employers' associations active m~opposing the 
advance of the unions some of the most important are those which 
have attempted to operate under agreements with organizations of 
their men and after affording the system a trial have found it un- 
suited to their needs and unadaptable to their industries. This is 
true of the National Metal Trades Association, which now refuses to 

^From Quarterly Journal of Economics, Vol. XXX (1916), pp. 352-386. 



deal with the Machinists' Union ; of the National Erectors' Associa- 
tion which will no longer countenance the International Association 
of Bridge and Structural Iron Workers ; of the National Founders' 
Association as regards the Iron Molders' Union. In addition, the 
influence of these failures has spread to nontrade organizations of 
employers such as the Anti-Boycott Association, the National Asso- 
ciation of Manufacturers, and the Citizens' Alliances, which have in- 
corporated in their policies a definite defense against union aggressions 

of every kind. 

The oldest and in some ways the most interesting of these now 
hostile traHe" organizations of employers ijjlifijiationaljounde^^ 
Association, whose membership comprises nearly five hundred manu- 
fiSurerTof cast-iron specialties in the United States and Canada, 
employing approximately one eighth of all the molders and core- 
makers in the country and producing a considerable proportion of 
the output of heavy machinery and lighter iron castings. The story 
of this organization's struggle with the Iron Molders' Union must 
always be an important chapter in the history of the American labor 
movement. Formed ini 898 jo rJhe_distinct.J)urpose oJ^^ibstiiixUn.g 
for the prevailing ind^St?I5rS?3ri"policy of cooperation with the 
U^ter'lST^d been so successfully done by the employers in the 
st^branch of the foundry trade, the National Founders' Asso- 
ciation the next year entered with enthusiasm into an agreement with 
the Union to arbitrate^ disputes and thus do away with strikes and 
the other annoyances characteristic of a union-dominated industry. 
But as the months went by, this instrument designed for peace seemed | 
to bring only an increase of trouble. Misunderstandings as to its 
purpose and the method of its operation, combined with actual if not 
especially glaring violations of its terms on the part of both orgam- 
zations, soon served to bring about great dissatisfaction. Yet for 
nearly six years the prescribed form of negotiations was gone through, 

and an honest effort was made by Association and Union to reach a 

iThe word "arbitration" as applied to the settling of labor disputes was 
originally used to designate all forms of conferences between employers and 
employees. In the case of the Iron Molders' agreements with both the Stove 
Founders' National Defense Association and the National Founders' Association 
the system required pure conciliation, the board being composed of an equai 
number from each side with no provision whatever for real arbitration mvolv- 
ing the calling in of an odd mau. 


r » n 




mutually acceptable method of procedure. When at last it became 
clear that there was no ground on which both could meet, the Asso- 
ciation abrogated the agreement and attempts at collective bargaining 
were abandoned. 

It was perhaps unfortunate that relations with the Union were 
undertaken by the National Founders' Association before its funda- 
mental law and administrative machinery were fully competent to 
handle the problems this relationship entailed, but in developing 
the technic as well as the policy of the Association to its present high 
standard of efficiency the experience with the Union played an im- 
portant part. As will appear in the following pages, it was not until 
1904 and the abrogation of the agreement that the policy of the 
Association was firmly established and the governmental, financial, 
and defense systems completely worked out. Since that time no 
change worth mentioning has been made in either structure or 
method, and the Association today is practically what its intercourse 
with the Iron Molders' Union has made it. It is the purpose of the 
present paper to describe its structural evolution, but in presenting 
the facts as to the development of its procedural mechanism no 
attempt has been made to pass judgment upon the justice of the 
position it has assumed or the principles for which it stands. 

The objects of the National Founders' Association as stated in the 
constitution are 

ist — The adoption of a uniform basis for just and equitable deal- 
\ ings between the members and their employees whereby the interests 
^ of both will be properly protected. 

2d — The investigation and adjustment by proper officers of the As- 
sociation, of questions arising between members and their employees. 

This purpose has never changed in the seventeen years of the As- 
sociation's existence, but the means by which it is to be accomplished 
have altered considerably. 

At first there was no definitely expressed policy beyond a deter- 
mination to band together the foundr>'men of the country for the 
purpose of ridding themselves of many of the working conditions 
which long years of effective unionism had established in their shops 
and of preventing further encroachments from that source. In place 
of union rules as the controlling force in fixing shop conditions, 
it was desired to establish those ''general principles of freedom to 



employers in the management of their --^^^V-^f"";'"" ^ tan 
thl British manufacturers in the industry had just o^tamed m an 
llement with their men. Nothing in this, however implied any 
ntent to crlsh the Union. Indeed, there was no hostility on the em- 
ployers par^^^^^^^^^ to thosepractices whichitwasbelievedhadprov^d 
detrimental to their employees as well as themselves. Could these 
t™ aled and the good which was known *« inh- ^ ^^mfn 
action be molded to the employers' ends, it was thought the workmen 
and the industry would both benefit.^ . ^ »i,» =;tm,P 

The model of' procedure first followed was that used by the Stove 
Founded National Defense Association, whose constitution was in 
manvprrts copied almost verbatim and whose policy of agreemen 
Th the Union served as the inspiration for the newer organuation 
r tempt to reach a satisfactory system of collective bargaining. Bu 
tiesTwe e no sooner tried than they proved in some rather ser.ou 
wa!- To be unsuitable. The constitutional misfits were remedied as 
The need became apparent ; the difficulties with the Umon were much 
more undamental": It was soon discovered that the freedom^ from 
Xr troubles which the Stove Founders had secured through th«r 
ateement had been purchased at the price of surrendering a con- 
siderate share of the control of the industry, that instead of shaking 
off ur^on rules and a never-before-recognized participation in shop 
mana^ementagreement had come to mean in the stove foundries 
kgitimatized copartnership of authority and administration. 

S a system the National Founders' Association had never con- 
temlted nor were its leaders convinced that conciliation necessardy 
TpS such a yielding to the Union as the stove -" ^ad gra td 
with what they considered to be so little given m return. During the 
vears of bargaining which followed there was evident on the part of 
Sssociatron a wmingness to make certain concessions to the Union 

1898; William H. P'/*^'"' "nfermce between the National Founders' Asso- 
^^^'' ""rtre i';^ Mo.der?S of ™ .Xmerica, New York March 8. 
ciation and the Iron ^I°'d"^ J^^ j ^^^ ^^ti^^^i Founders' Association, 

iSoQ MS.), pp. 5-6. ^"^ .' =^,. ' „ p,,u Au.'usto 1899, pp. 41, 45 ; id- 
Buffalo, February ., 1899, P- 4; 'f„N.aga--a ^f ' ^u.ust^, 899, PP ^^^^.^^^^ 

New VorU Nov b„ .3, ,9°; Cmb^ril'i t t Z R^ie., December, 
',;;rpp. 718! '36tNat"ri Founders' Association Confidential Circular No. 6. 




if its members were to receive commensurate benefits. But all at- 
tempts to reach a mutually acceptable set of working rules were 
balked by the Union's inability to give up or modify any part of 
its fundamental law. This attitude on the part of the Union may 
not have been without some justification, but the fact remains that 
the original plasticity of the Association's policy gave way gradually 
to a rigidity which made it as unarbitrable and unsusceptible of com- 
promise as that of the Union, and whereas in 1900 the cardinal prin- 
ciples according to which the Association desired to operate were 
presented mainly as a suggestion of certain features to be embodied 
in an agreement, since 1904 they have served as an ultimatum 
whenever Association and Union have come in conflict. 

Briefly summarized, the Assoc iation's oiitUne of policy declares 
against union restriction of output, union limitatibn'oflhe' earning 
capacity of the employee, union limitation on the employment of 
apprentice s, union impositio'iToI fines and restrictions upon work- 
"^^"- I t is in fa vor of a fair day's pay for a fair day's work^ the right 
of the employer to hire whomsoever he sees fit without regard lo 
union affiliation, the op'eration of molding-machines and approved 
appliances without restriction, the education of the American boy 
in the trade of molding without union interference. Instead of repre- 
senting its members in a collective capacity to negotiate with their 
men for the terms of employment, the Association has become in 
reality a mutual insurance organization whose members are protected 
against the excessive demands of the Union and receive aid in 
upholding in their shops the principles for which the Association 

Although the original law of the Association, combined with the 
almost immediate ratification of the agreement with the Union, made 
ample provision for the elimination of cessations in the industry 
through the use of conciliation in the settlement of disputes, the 
Association was so organized that it could fight if occasion required, 
and, in spite of all efforts to maintain peace, recourse to active de- 
fense measures was frequently thought to be necessary. When rela- 
tions with the Union were broken off entirely, although the Association 
continued to indorse the principle of employer and employee getting 
together to talk over disagreements, its protective work was still 
further developed and systematized. 


The by-laws have always stipulated that when a member had a 
dispute with his employees which neither he nor representatives of 
the Association could settle and in which the latter believed he should 
receive support, he might be defended in one of three ways : first, 
by procuring men for him who would take the place of the strikers 
second, by affording him compensation for loss of production ; third, 
by making such work as he might require. , u .„ 

In practice, securing molders to take the place of strikers has been , 
the method of defense most generally used. Very early the plan was 
devised of issuing to those men who had been faithful to their m- 
ployers in time of labor troubles a ^^card," or certificate of loyalty, 
which was to secure for them the special consideration of all members 
and which at the same time made available for the Association a 
somewhat permanent force of strike breakers. The cards were ac- 
cepted by the men with the understanding that they were issued by 
the Association and remained the property of the Association, to be 
revoked and recalled at pleasure upon evidence of breach of faith on 
the part of the holder. Whenever a man took employment with an 
Association member he deposited his card with his employer to be 
returned to him at the termination of his contract if his service had 
been satisfactory, or turned over to the secretary of the Association 
Nvith a statement of the circumstances for investigation in case his 
conduct had not been such as befitted the bearer of such a recom- 
mendation. It was not intended that card men should remain in 
the foundries of members as permanent employees, but should be 
used simply to break a strike and then be moved on when the trouble 
was over and the regular force returned. In the two big strikes which 
were handled with this system of defense, 75 per cent of the strik^ 
breakers used in the second were card men who had been employed 
in the first,^ which would seem to indicate that the men were pleased 
with the arrangement and that for the Association it provided a 
means of getting molders much more satisfactory than the usually- 
resorted-to newspaper advertisements and employment agencies^ 

It is not known exactly how many of these cards were issued. The 

first were given out during the Cleveland strike of 1900, and in the 

following May, immediately after the settlement of that dispute 1 

was reported that 221 were held by men who had worked for the 

1 Report of the Secretary, N.F. A, November, 1901 (MS.), p. 30. 




Association at least sixty days.^ By November, 1902, the number 
had mcreased to 431.= Although the practice of issuing cards was 
contmued for some time longer, it is probable that not many more 
than this were given out, perhaps 500 in all. 
I Besides receiving the cards, the men who were used to break strikes 
fwere guaranteed a "bonus" of at least $1 a day in addition to the 
t wages paid by the individual employer in whose shop they worked 
I This bonus was paid from the reserve fund of the Association as a 
I "strike benefit" in recognition of the great inconvenience, social 
I ostracism, and perhaps even personal danger to which every strike 
breaker is known to be more or less liable. Loam molders in Cleve- 
land received a bonus of $4, and it is probable that some men earned 
$7 and more a day at that time.^ 

The cost of this card-and-bonus system was thought to be on the 
whole, less than that of any other method of combating labor troubles 
In the Cleveland strike, which lasted seven and a half months and 
required the importation of 610 men who worked one day or more 
the total cost to the Association was $142,604.52, divided as follows : 
Administrative council .... «^ o^ 

o^- -P-- :::::: ';;6 : f 

Procuring moIdcrs 7 i c^ -> 

Delivering molders . . ' a'. " 

^ °. "> 1 99-39 

Compensation to foundries 3ii7;'>c 

Bonus to molders '.'..[ 79',7os's3 

Detective service ^ q 

Miscellaneous expense '70- 6c 

Expense of riot, September 29, 1900 85404 

Legal services .... 

,. - , 415.00 

±.xpense of boarding men out 3 28'> -^8 

The cost of procuring and delivering molders alone was $21 89 per 
molder.^ In subsequent struggles this item was materially reduced 
because of the systematic use of card indexes and other devices for 
keeping in touch with the men once found, which made gettin- strike 
breakers at another time an easier matter than had been the'assem- 
bling of the group in the first place. Thus the total expense to the 

1 Report of the Secretary, N. F. A., Mav, looi (MS) p n 
^Proceedings N^F. A., Detroit, November 19, 1Q02 (MS.), p. 20. 
^^ Report of the Secretary, N. F. A., xNovember, 1900 (MS) 
* Id. May, 1901 (MS.), pp. 7-9. ^^* 




Association of the Chicago strike of 1901-1902, which lasted thirteen 

months, was only S47,58..33. Here 440 ™-;\° T^ J^^^ the 
or more were supplied at an average cost of only $6.28 P^r «an the 
total saving per man per day worked bemg 117 per ^«"t f "^^ ^f 
of the same item in Cleveland the year before.' In 1903 the total 
cost of supporting twenty-three members whose 853 men had gone 

out was only S46,2i&.()i.- 

This method of fighting strikes was fa.rly satisfactory so long a. 
it was expected the strike breakers would be used only as a temporary 
lever to bring to terms Union members who would eventually be 
taken back But there were several circumstances in connection 
with the use of the cards which made them open to abuse, and, more- 
over the system left the members of the Association as dependent 
as ever upon the Iron Molders' Union for the maintenance of a 
trained and permanent labor force. This situation was recognized as 
early as 1901.' But it was not until the break with the Union several 
years later and the establishment of a nonunion policy that 't became 
positively necessary to provide for a member having trouble w. h 
his molders a crew of independent men who would permanently 
operate his foundry. To attain this end there are now employed under 
yearly contract a number of mechanics skilled in the trade of molding 
and coremaking who are placed in the shops of members m periods 
of labor troubles to act as instructors in breaking in and training new / 
sets of men. These operatives are in no sense strike breakers, fori 
from the moment the union men go out the Union is completely/ 
ignored and the Association is concerned not with breaking the strik^ 
but with making the most of the opportunity afforded by the walkou^ 
to start up again on an independent and nonunion basis. As rapidly 
as the shop assumes normal conditions the contract molders are 
turned back to the Association and transferred elsewhere. By the 
terms of their contract they are to go wherever they are sent, their 
railroad fare is paid, and they lose no time because of the trave ing. 
All men employed through the Association to assist one of its 
members in making his foundry independent of the Union are en- 
gaged either under this yearly contract or under one which is very 

1 Proceedings, N.F.A., Detroit, November 19, 1902 (MS.), p. 15. 

2 Id Washington, November 11, 1903, P- "■ 

3 Report of the President, N.F.A., November, 1901 (MS.), p. 14- 








similar to it but is to run only sixty days. They are guaranteed 
wages varying from S4 to S5 a day for daywork, depending upon 
skill. In some cases the men arrange with the firms to which they 
are assigned, to work piece or premium plan, and earn in this way 
sums considerably in excess of the guaranteed day rate. It is said 
that the labor bureaus run by the Association have been in oper- 
ation so long, and that the Association is so well and favorably 
known among the independent molders and coremakers of the country 
because of its fair dealings, that the bureaus are constantly in touch 
with men seeking work and can readily supply from time to time 
whatever labor is needed by the members. The number of men under 
yearly contract varies with the industrial conditions prevailing. Their 
contracts expire at different times of the year, and adjustment of 
supply to demand is therefore easy. When labor troubles have been 
few, not many will be thus engaged, but the sixty-day-agreement men 
supplement the others so nicely that practically any foundry can be 
adequately manned on twenty-four hours' notice. 

When a member's support is to consist of the establishment of a 
new labor force in his foundry, the Association men are shipped to 
him and turned over to his control. INIen who are to be trained are 
engaged, being often persons previously employed as laborers and at 
unskilled work in the shop. Machines are installed, specialized jobs 
are planned, piecework and other schemes for encouraging men to 
large output are introduced, and in a short time the foundry is in 
full operation with a new lot of men, improved appliances, and 
freedom from union rules and regulations. 

Occasionally a condition may arise where it becomes necessary or 
desirable for one member to lend some of his men to another who is 
involved in a strike. This was sometimes done in the days before 
the present large supply of nonunion men had been made available, 
but the commissioner reports that it is a practice to which recourse 
is now seldom had. Other methods of defense provided for in the 
by-laws are also used but little, although they may at times supple- 
ment the customary method. To send struck work out to be made 
has been found very likely to bring on sympathetic strikes in the 
foundries to which it goes. To pay compensation for idle floors is 
readily seen to be only a last resort. Compared with the system of 
breaking in a crew of nonunion molders for permanent employment 



these latter plans present mere palliatives, for until a body ofinde- 
pendent men has been assembled and tramed m any foundry an 
employer is as much at the mercy of the Un>on as ever and has not 
succeeded in ridding himself of the causes which were usually mstru- 
mental in bringing on the trouble in the first place. 

For administr3ti.:^.W^0S£u_tbe^SS2c 
tTiHS^TS^^^^c^toT^^ « a djstnoxonmutt^e 

o('fi^ri;;^g^^Iec!gjY the Associationj^om names suggested by 
thT^JT^SKJiTHi^^SricT^^ is made to make these 

Is representative as possible of the various localities and foundry m- 
terests Each district committee chooses its own chairman and vice 
chairman, who constitute with the president, vice president, and trea^ 
urer of tke Association (unless as at present the last named is a 
banking institution) an administrative council, ^o-^ ^11 Pr^t,^ 
purposes as regards formulation and carrying out of policy, this 
bX ;upreme, except that the constitution can be changed only 
by Lorable action of two thirds of the members; and such oth 
matters as make an expression of opinion from all desirable are 
referred to their consideration. .:„„ „t the 

Smm the yerjLmture of the or^nization the mam function ijfjbe 
admink^ve council has" been the settlement and P^^^^^ 
latorditorties. At first the president and the district committees 
e£^eff-to adjust the constantly arising disputes without the serv- 
ices of any single person whose entire attention could be devoted to 
tWs work Every dme a member had a grievance with his employees, 
no nTatter how Uivial, which the two parties could not settle among 
themselves word was sent to the proper district committee This 
had to meet within three days at the foundry of the complaining 
member, decide on the merits of his controversy, and if it appeared 
he was in the right, arrange for such support as they were willing 
to alw in case the Union pressed the issue. It was also found nee s- 
sarv to convene the entire council in a number of sessions a year 
Thus the time and effort required for Association affairs on the part 
of busy men was so great as to involve serious neglect of their own 
interest Few could afford to take responsible offices, and those who 
did serve felt obliged to limit their terms to one year. The member- 
ship of the administrative council and district committees was 
therefore constantly changing. 





In an effort to make the burden of leadership less hea\y the salaried 
»ffice of commissioner was created in 1901 for the purpose of giving 
me man charge of the details of settling labor troubles and carrying 
ton the executive work of ,the Association. This has greatly relieved 
the district committees as well as the president, for they are not 
called in now until all preliminary investigations have been made by 
the commissioner. When he believes a strike cannot be averted the 
committee meet to decide whether or not they will grant support. 
In 1906 the president was allowed a salary for such a part of his 
time as the growing administrative work of the Association required. 
The result of these changes has been a greater permanence in the 
offices and a higher degree of efficiency all around. An adequate office 
and field force of experts, with headquarters in Chicago, New York 
and Buffalo, handle the work of the Association. It has become an 
exceedingly effective business machine, although much of the per- 
sonal interest and relationship which prevailed when the group was 
smaller has necessarily been lost. 

\ In order to obtain the Association's support in time of strike a 
Idefinite procedure is rigorously exacted of all members. Experience 
has proved that anything short of this is sure to involve endless 
misunderstandings and other complications of a more serious nature 
Before the defense work was thoroughly systematized there were 
many disagreements as to the amount of compensation and the cir- 
cumstances under which it would be paid. Members took action and 
contracted expenses without authority from officers, council, or dis- 
trict committees, and expected the Association to get them out of 
whatever further difficulties this involved them in with their molders 
and to reimburse them for all expenditures. When this was refused 
hard feeling, resignations, and lawsuits followed. In 1904 in the 
general reorganization of the Association's affairs, the protective sys- 
tem was put on its present well-defined basis, and it was distinctlv 
understood that thereafter all claims would be thrown out entirely if 
procedure had not been according to the letter of the by-laws 

A member having trouble with his men is required to notify the 
commissioner at once, in writing, giving the full details of the case 
An immediate investigation is then made, and if possible the breach 
IS patched up. This failing, the district committee is called together 
to determine whether or not the aggrieved member's cause is just 




and the findings are reported to the administrative --- ^' ^ J^^^ \ 

rests the final decision as to the granting of support, its na ure, and \ 
amount. By asking the Association's aid the -mber Pla^^^^^^^^^ 
matter entirely in its hands and binds himself to carry out any dec^e 
of the council or of those acting under its authority, and pending the 
decision he can make no settlement nor discharge his men without 
the consent of the council. In case support is granted it may b m 
any one or more of the three ways already mentioned, provuied tha 
the supplying of men or the making of work in another shop shall 
not be undertaken without the consent of the member. It .s further 
understood, and now included in the by-laws, that m P-™ ^^J^ 
ers having the work done, or giving a money compensation o he 
Tmount of two dollars per man per day this ^^ ^^^ ^f^^'^l 
extent of 70 per cent of the men usually employed or the work 
produced as evidenced by the last quarterly report. 

The method of defense having been decided upon, ^n agreement for 
support is entered into between the member and the Association, in 
which the latter undertakes to assist and support the member for a 
reasonable period, this aid to be determined by the administr^^^^^^^ 
council, who may reduce it from time to time or discontinue it entirely. 
The member in return agrees that the aid given is to be considered a 
the complete satisfaction of all claims on the Association because of or 
on account of the prevailing strike, agrees not to make any terms with 
the strikers or the' union representatives without the written consent 
of the council, agrees to provide at all times adequate police protection 
for the men furnished, and to absolve the Association from all respon- 
sibility for any industrial accidents which may occur Finally, the. 
r^ember agrees that for a period of one year following the satisfactory 
Xtment of the trouble he will conduct his foundry strictly on the[ 

"open shop" plan. . . 

The supDort of the Association is by no means g.ven every time it 
is requested, and in no case is a member entitled to aid until he has 
been'in the organization at least two months The councd m | s 
discretion may refuse help where the member has faded to adv^e 
the commissioner promptly of the ^-^'^f ^/^^ "ature of he troub^ 
or when he has declined to comply with the advice of the president 
o Tommissioner. But having acted in accord with the Association s 
rules in all respects, a member can expect to be supported in any 




attempt to enforce those principles for which it stands, as enumerated in 
the outline of policy. In other matters the granting of aid will depend 
upon the issue involved and the justice of the member's position. 

For the year ending November i, 19 13, the support of the Asso- 
ciation was granted in thirty-two shops. As understood and classified 
by the Association the issues involved were 

Refusal to work with nonunion men 2 

Attempt to organize and force closed union shops . . . . i r 

Control of molding machines i 

Elimination of differential wage rate i 

Refusal to di